September saw the oil market move sharply higher as the US-Iran conflict escalated, with renewed attacks on commercial shipping, disruptions to Saudi infrastructure and increasingly tight refined product markets combining to push Brent above $105/bbl. The month began with Brent around $88/bbl but ended at $97.02/bbl, after briefly reaching $105.51/bbl in the middle of the month.

Supply concerns intensified again following drone attacks on Saudi Arabia’s East-West pipeline. The 1,200-kilometre pipeline provides a critical alternative export route to the Strait of Hormuz and its temporary closure removed around 5 million bpd of potential Saudi export capacity. Saudi crude production had already fallen to 6.23 million bpd in August, its lowest level since 1990.

The attack came alongside further disruption to Russian refining capacity. Ukrainian drone strikes damaged or halted operations at several Russian refineries, including the 300,000 bpd Yaroslavl facility, while further attacks targeted the Perm, Novoshakhtinsk, Ryazan and Ilsky refineries. Moscow responded with restrictions on gasoline and diesel exports, adding further pressure to already tight global middle distillate markets.

The second half of September brought some relief as Saudi Aramco worked to bypass the damaged section of the East-West pipeline and restore around half of its capacity. The prospect of renewed Saudi exports through Red Sea terminals helped Brent fall below $97/bbl by 22 September. However, the market remained highly sensitive to developments around the US-Iran negotiations, with diplomatic talks through intermediaries failing to produce a lasting agreement.

The final day of the month provided some evidence of improving supply. Saudi Arabia restarted crude exports through the East-West pipeline at around 3.5 million bpd, approximately half of its capacity. Meanwhile, discussions between the US and Iran continued, although the nuclear programme remained a key obstacle to any agreement. Brent ended September at $97.02/bbl.