Saudi Arabia, a major Middle Eastern oil producer, has raised crude shipments through its key trans-country pipeline to more than 80% of its capacity. As the kingdom cuts crude supplies to domestic refineries, the volume of crude available for export from its west coast has reached its highest level since the US-Iran war broke out in late February. With the pipeline back in service and expectations of a global oil reserve release pushed by French President Emmanuel Macron jointly easing supply concerns, the market has begun reassessing the crude scarcity premium and energy cost pressures.

A person familiar with the matter said Saudi Aramco, the kingdom's largest state-owned enterprise and one of the world's biggest energy giants, is now shipping close to 6 million barrels per day through the East-West pipeline. The person, who asked not to be identified because the information is private, said that after deducting crude supplied to refineries on Saudi Arabia's west coast, the company currently has about 4.5 million barrels per day available for export. Saudi Aramco and the Saudi Ministry of Energy did not respond to requests for comment outside normal working hours. Earlier this week, the pipeline, which has a capacity of 7 million barrels per day, was still running at only about half its capacity before the company quickly raised throughput. During the Iran war, this pipeline has been a vital channel for keeping crude flowing, allowing Saudi Arabia to export nearly 4 million barrels per day via the Red Sea earlier this year without relying on the dangerous voyage through the Strait of Hormuz. However, this route has come under pressure in recent months. Last month, the pipeline stopped operating after being hit by a projectile fired from Iraqi territory. The chart above shows Saudi crude loadings — crude shipments rose in September to near the 2025 average as traffic through the Strait of Hormuz surged. Note: September data covers only the first 23 days of the month. Source: ship-tracking data compiled by Bloomberg. Saudi Arabia responded to the pipeline shutdown by sharply increasing shipments through the Strait of Hormuz in recent weeks. The Red Sea port of Yanbu, where the East-West pipeline terminates, has also resumed loadings. JPMorgan and Goldman Sachs estimate that these factors combined have driven a broad rebound in Middle East oil exports through Saudi crude shipments, bringing them close to pre-war levels. The increase in overall exports helped push oil prices lower this week, with Brent crude in the London market finally falling below $100 per barrel on Friday. As the United States sends an additional aircraft carrier and troops to the Middle East, futures traders in commodity markets are also closely watching the risk of a possible escalation of hostilities in the region.

Saudi Arabia is opening its "crude pressure relief valve." The kingdom's ability to ship crude bypassing the Strait of Hormuz is being unlocked at an accelerating pace, providing an important supply backdrop for the pullback in oil prices ahead of today's US stock market open. Actual throughput on the East-West pipeline has risen from about half its load earlier this week to nearly 6 million barrels per day, equivalent to roughly 86% of its nominal 7 million barrels per day capacity; after deducting west coast refinery supplies, about 4.5 million barrels per day of crude is available for export, the highest level since the war began. At the same time, Saudi Arabia's earlier increase in Hormuz shipments and the resumption of loadings at Yanbu port have complemented each other, strengthening the resilience of crude outflows. It is important, however, to distinguish precisely: the 4.5 million barrels figure refers to crude available for export, not yet loaded, departed or delivered. The recovery in supply, together with Europe's discussion of releasing reserves, has jointly pushed down pre-market energy prices. At 20:02 Beijing time on October 2, Brent crude futures were at $99.78 per barrel, down 2.47%; WTI was at $89.55 per barrel, down 3.57%. European diesel benchmark futures fell about 4.1% over the same period to $1,390 per ton. Based on the settlement prices on February 27, the last trading day before the war broke out on February 28 — Brent at $72.48 and WTI at $67.02 — the two are still up about 37.7% and 33.6% respectively from pre-war levels. This means the market is lowering the supply disruption premium, but prices have not yet returned to pre-war levels. Military and shipping risks, however, remain. The United States is sending a third carrier strike group and about 9,000 to 10,000 personnel to the Middle East; Iran is maintaining diplomatic channels while preparing a broader response in case the US resumes large-scale strikes. Although more tankers are transiting Hormuz, three tankers were still reported hit by unidentified projectiles on September 29; fighting continues in southern Red Sea Yemen, and on October 2 government forces announced 20 airstrikes on Houthi targets in Taiz. The more accurate market narrative at present can be described as "recovery in crude outflows coexisting with shipping risks," and the sustainability of the supply improvement is being tested.

The "crude relief line" is moving forward, while refined products and global interest rates still await easing. This recovery involves both faster pipeline flows and a reallocation of crude between domestic refineries and exports. Media reports did mention that Saudi Arabia reduced supplies to domestic refineries, increasing crude available for export on the west coast. Therefore, after global markets receive more crude, it remains to be seen whether refineries at receiving destinations can process it into products such as diesel and jet fuel. Reducing oil shipments from one pipeline to refineries also cannot directly lead to the conclusion that Saudi Arabia's nationwide refining volume has declined, because refineries may use other sources or inventories. The IEA previously reported that due to maintenance and war damage to refining capacity in the Middle East and Russia, global refinery throughput in August fell by 4.2 million barrels per day year-on-year, enough to show that the refining segment itself remains a supply constraint. Shipping routes also need to be assessed separately. The East-West pipeline sends crude to the Red Sea port of Yanbu, allowing it to bypass Hormuz; but sailing south from Yanbu to Asia still faces security risks at the Bab el-Mandeb Strait, while going north through Suez to Europe avoids Bab el-Mandeb. The latest progress in restoring Saudi pipeline flows has improved route options, but final export realization still depends on loadings, insurance and safe navigation. The "crude relief line" is moving forward, while the "fuel relief line" still depends on refining and cross-border delivery. If crude prices fall while diesel cracking spreads relative to crude remain elevated, it means supply improvements have not yet been fully transmitted to end-user fuel costs. Global long-term bonds have partially recovered but remain in a high-yield range. Quotes verifiable before the nonfarm payrolls release show the US 10-year Treasury yield at about 5.22%, below the 5.34% briefly touched on October 1; the UK 10-year yield at about 5.33%, with the 30-year also retreating after previously breaking above 6%; Japan's 10-year at about 3.11% and 30-year at about 4.21%, still at high levels. Cooling oil prices help ease inflation and rate-hike expectations, but Japan's policy normalization, fiscal supply across countries and real capital demand will still affect long-end rates. For optimistic expectations surrounding the global AI bull market, the investment significance of this transmission chain lies in the fact that if improved energy supply in the Middle East can continue to lower end-user cost pressures, it could cool the "anchor of global asset pricing," easing financing thresholds for AI capital expenditure and valuation discount pressures on technology stocks.