Crude Oil spikes on a shut Saudi pipeline and unwinds on Trump's posts

West Texas Intermediate (WTI) crude oil prices rose to around $98.00 per barrel on Friday, up about 1.4% for the day. This increase occurred shortly after 12:30 GMT and was largely reversed by 19:00 GMT. The rise was attributed to a Saudi pipeline that was shut down due to a burnt-out pumping station, as photographed from orbit on Sunday.

The decline in prices came after four posts on Trump's Truth Social platform, with the last one predicting a significant drop in oil prices once the conflict ends. Saudi crude oil is exported through three routes, but all three experienced challenges over the weekend. Tankers struggled through the Strait of Hormuz, where Iran now requires permission, while the East-West pipeline and the Bab el-Mandeb or Suez routes faced disruptions.

The Houthi group captured the port of Mokha and Perim Island, blocking access to Bab el-Mandeb, and Saudi Arabia reported its lowest August production in 1990. The export volume has also dropped, reaching its lowest since 2013. The sell-off in WTI prices featured four distinct stages, each starting minutes after a specific post on Truth Social.

The first post at 15:05 GMT suggested Ukraine and Russia had agreed to cease striking each other's energy facilities, attributing the impact on diesel prices to the conflict rather than the oil crisis. The second post at 15:32 GMT claimed that Iran desired an agreement urgently and that the United States would decide whether to engage.

The third and fourth posts at 16:25 and 16:31 GMT stated that Saudi crude oil was flowing through the Hormuz Strait, and the price would fall sharply once the conflict concluded. The U.S. Energy Information Administration forecasted crude oil inventories at 285.4 million barrels in the week to September 4, the lowest level since November 1982, and 130 million barrels below the level when the war began.

The Federal Open Market Committee is scheduled to announce its latest Summary of Economic Projections on Wednesday, potentially leading to a rate increase for the first time since 2023. Traders noted that the WTI price broke above $100.00 for three consecutive days, with the most recent close occurring on Thursday. The support level held at $97.00, while the resistance level was between $100.50 and $101.00. The Stochastic Relative Strength Index remained at a high level, indicating a strong upward trend.