Saudi East-West line back to about 3.5 million barrels a day, half its capacity, as Gulf crude exports hit a war-time high

Where it stands

Qatari mediators were expected to hold separate talks with Iranian foreign minister Abbas Araghchi in New York and with the US side on Monday or Tuesday, focused on an amended version of Iran's seven-day plan, an official briefed on the negotiations told Reuters, while Saudi foreign minister Prince Faisal bin Farhan arrived in Washington for talks with Secretary of State Marco Rubio. Five people told Reuters that Aramco is considering discounts on official selling prices for crude loaded off Oman to offset record freight rates. Brent jumped more than $4 in early Monday trade after Trump's rejection of the Iranian plan, then settled up 96 cents at $105.28, with WTI up 19 cents at $92.60, per Reuters. Status: monitoring.

What happened

Bloomberg's sources put the line's total capacity at about 7 million barrels a day, of which about 5 million is typically earmarked for export and about 2 million feeds refineries on the kingdom's west coast. Saudi authorities said on September 11 that drones launched from Iraq closed the route, per Bloomberg via Al Arabiya, and Reuters, citing Kpler, says the kingdom diverted exports from Yanbu to Ras Tanura after the attacks. The diversion shows in the totals: Saudi exports reached a war-time high above 5 million barrels a day in September, mostly to Asia and mostly through Hormuz, per Bloomberg, while some European customers were told they would receive no October barrels under term contracts. Yanbu remains exposed: Bloomberg notes the Houthis stepped up attacks this month on energy infrastructure in the kingdom's southwest and at Yanbu, and Saudi Arabia has issued warnings for cities including Riyadh, Jazan and Mecca.

The diplomatic record frames the restart. Oil pared its early gains on Monday on expectations of Qatari mediation, per Reuters, after Oilprice.com, citing the Wall Street Journal, reported that Trump is weighing renewed strikes on Iran after the November midterms. UBS analyst Giovanni Staunovo told Reuters that flows remain below pre-conflict levels and the market is undersupplied; about 20 million barrels a day moved through Hormuz before the war. Beacon notes the gap between Kpler's September Hormuz figure of about 7.4 million barrels a day and Tanker Trackers' estimate of about 13 million exiting the US blockade line, reported on Saturday: the first is a month-long average that includes the single-digit transit days in mid-September, the second a recent run rate. They measure different things, and Beacon will carry both series rather than blend them.

Analysis

What it means

The watch item in Beacon's Monday edition resolved the other way: Aramco is running both outlets at once, and the line has passed the roughly 40 percent near-term target Beacon logged on September 23. For integrity managers, the ramp toward 7 million barrels a day over about six weeks runs on a line repaired during an active campaign against Saudi energy sites, toward a Yanbu terminal the Houthis have targeted this month, and with no damage assessment published, throughput is the only public proxy for pump-station condition. For investors, on Bloomberg's split of about 2 million barrels a day to west-coast refineries, today's rate leaves roughly 1.5 million for Red Sea export if those refineries draw their usual volume: watch Aramco's November allocations to the European term buyers it cut to zero for October, and whether the Oman-loading discount shows up in November prices.