17 September 2026 | Energy & Markets

Oil prices fall for a second day

Oil prices extended their decline in Asian trading on Thursday as signs that Saudi Arabia can redirect some crude exports through Oman eased immediate concerns about shortages caused by disruptions to Middle Eastern supply routes.

Brent crude futures were down about 1.2% at $104.59 a barrel, while U.S. West Texas Intermediate (WTI) fell about 1.1% to $101.29 in early trading. Both benchmarks had dropped roughly $3 on Wednesday.

The decline represents a change in market sentiment after oil prices climbed sharply earlier in September as attacks on energy infrastructure and shipping routes raised concerns that Middle Eastern exports could be significantly curtailed.

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Saudi Arabia finds an alternative export route

The immediate catalyst for the latest decline is Saudi Arabia’s reported decision to offer additional crude cargoes to Asian refiners through Oman.

People familiar with the arrangements told Reuters that Saudi crude is being moved through ship-to-ship transfers near Oman’s Sohar port. The alternative route is helping reduce the impact of disruptions affecting Saudi Arabia’s East-West pipeline and the Red Sea export terminal at Yanbu.

The workaround does not completely eliminate the supply problem. Reuters reports that the additional shipments are not expected to fully replace exports lost from Yanbu.

That distinction is important for the market: traders are reacting to evidence that some barrels can still reach customers, rather than concluding that Middle Eastern supply disruptions have ended.

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What happened to Saudi Arabia’s pipeline?

Saudi Arabia’s East-West pipeline has become particularly important because it provides a route for crude to reach the Red Sea without passing through the Strait of Hormuz.

Recent attacks damaged pumping stations along the pipeline, affecting the flow of crude toward Yanbu, one of Saudi Arabia’s important Red Sea export facilities. Saudi Arabia subsequently suspended some loadings from Yanbu and cancelled some deliveries to European customers.

The pipeline’s disruption had contributed to the rapid rise in oil prices earlier in the week.

On September 15, Brent and WTI settled more than $3 higher, reaching their highest levels since May 19, after the Yanbu disruption intensified concerns about available supply.

Oil pump in the desert

Oil remains above $100

Despite the latest decline, crude remains above the psychologically important $100-a-barrel level.

That reflects the fact that the underlying geopolitical risks have not disappeared.

Brent had settled at $105.83 on Wednesday after falling 2.7%, while WTI settled at $102.43, down 3.2%.

Earlier in September, the benchmarks had surged as attacks on shipping and energy infrastructure raised fears of prolonged supply disruptions. On September 10, Brent jumped more than 6% to settle at $107.63, while WTI rose to $102.48.

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The Strait of Hormuz remains a major risk

The oil market continues to watch the Strait of Hormuz, a critical energy shipping route.

Before the current conflict, approximately one-fifth of global oil supplies passed through the waterway. Recent restrictions and security concerns have significantly reduced tanker traffic. Reuters reported that only four vessels passed through the strait on Tuesday, compared with seven the previous day.

This leaves the global market vulnerable to another escalation.

Saudi Arabia’s alternative routes—including shipments through Oman and other workarounds—can partially reduce the impact, but they cannot necessarily replace all the volumes that normally move through the region.

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U.S. inventories also weigh on prices

Another factor pushing prices lower is the latest U.S. inventory data.

U.S. crude stocks fell by only 640,000 barrels last week, according to the Energy Information Administration, compared with analysts’ expectations for a decline of about 1.62 million barrels.

A smaller-than-expected decline suggests that the U.S. market currently has somewhat more supply available than traders had anticipated.

The inventory picture therefore provides another reason for traders to reduce the amount of geopolitical risk being priced into crude.

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But fuel markets remain under pressure

The fall in crude prices should not be confused with an easing of all energy-market pressures.

Diesel markets remain particularly tight.

Reuters reported that Asian refining margins for low-sulfur diesel recently climbed above $87 a barrel, an all-time high based on LSEG pricing data. European diesel prices have also remained close to record levels.

This creates a significant distinction:

Crude oil prices are falling, while refined fuel markets remain exceptionally tight.

For consumers and businesses, that means lower crude prices may not immediately translate into significantly cheaper diesel or other petroleum products.

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Saudi production has already been severely affected

The current price decline also comes against a backdrop of substantial disruption to Saudi oil production and exports.

The International Energy Agency estimated that Saudi crude supply fell to around 6 million barrels per day in August, its lowest level in more than three decades. The IEA attributed the decline to attacks affecting oil infrastructure and shipping around the region.

The agency subsequently revised down its 2026 Saudi crude-supply forecast.

The U.S. Energy Information Administration likewise estimates that Middle Eastern crude production shut-ins averaged 6.7 million barrels per day in August, up from approximately 5 million barrels per day in July.

These figures illustrate why the market remains sensitive to any new attack or disruption even when prices are temporarily declining.

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Market picture

Factor	Current effect on oil
Saudi crude offered through Oman	Reduces immediate supply fears
Damage to East-West pipeline	Continues to constrain exports
Yanbu loading disruption	Negative for available supply
Lower-than-expected U.S. inventory draw	Puts downward pressure on prices
Low Strait of Hormuz traffic	Maintains geopolitical risk premium
Tight diesel supplies	Supports refined-fuel prices
Continuing Middle East conflict	Creates risk of renewed price increases

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What could happen next?

The direction of oil prices will depend heavily on whether alternative supply routes remain available and whether further attacks disrupt additional infrastructure.

For now, the market appears to be responding to evidence that Saudi Arabia can partially compensate for lost Red Sea exports.

However, this is not the same as a return to normal supply conditions.

The IEA has warned that disruptions in the Gulf and wider Middle East could keep global oil markets tight. The EIA’s September outlook also assumes that Middle Eastern oil flows will remain constrained through the fourth quarter of 2026, although it expects flows to gradually increase as shipping companies develop alternative routes.

That leaves the market particularly sensitive to three developments:

1. Whether Saudi Arabia can sustain alternative shipments through Oman.
2. How quickly the East-West pipeline can be repaired.
3. Whether fighting around the Strait of Hormuz and Red Sea intensifies or eases.

Independent assessment

The latest decline in oil prices is primarily a supply-logistics story rather than evidence that the Middle East crisis has ended.

Saudi Arabia’s ability to redirect crude through Oman has reassured traders that at least some displaced barrels can still reach Asian buyers. Lower-than-expected U.S. inventory withdrawals have provided another bearish signal.

At the same time, oil remains above $100, tanker traffic through the Strait of Hormuz remains severely affected, Saudi production has been disrupted and diesel markets are experiencing extraordinary tightness.

The immediate supply panic has eased, but the underlying risk to global energy flows remains significant.

For consumers, refiners and governments, the key issue in the coming days will therefore be whether these alternative shipping arrangements develop into a sustained supply solution—or whether another disruption causes the risk premium in oil prices to rise again.

Sources

Reuters, Oil prices extend losses as fears of Middle East supply disruptions ease, 17 September 2026.

Reuters, Oil slips as Saudi Arabia offers more crude via Oman, 16 September 2026.

U.S. Energy Information Administration, Short-Term Energy Outlook, September 2026.

Reuters, reporting on Saudi supply, Asian diesel markets and Middle East disruptions.