The Commodities Feed: Oil stronger on Saudi pipeline shutdown

Oil prices have climbed following recent attacks on Saudi Arabian energy infrastructure, including the shutdown of a key pipeline. ICE Brent prices are up around 3%. Saudi Arabia has halted the 7 million barrel per day pipeline, but the extent of the damage and downtime remains uncertain. Despite the current risks to the forecast, expectations remain for Brent to average $80 per barrel in the fourth quarter of 2026.

The situation is fluid, with substantial volumes still passing through the Strait of Hormuz. A Gulf states meeting to discuss the issue was postponed due to lack of consensus, pushing any de-escalation further away. The International Energy Agency has revised its demand forecasts, predicting a 2.5 million barrel per day decrease this year, significantly more than its previous estimate.

Global oil inventories have dropped by 95 million barrels since February, with cumulative draws totaling 507 million barrels. Speculators have increased their long positions by 4,318 lots, driven by short covering. Middle distillate markets are tight, with gasoil crack trading at a record high of $84 per barrel. President Trump pressured Ukraine to halt attacks on Russian refinery infrastructure, which has exacerbated global market tightness.

The USDA lowered US corn ending stocks estimates to 1.57 billion bushels, down from 1.51 billion bushels, driven by weaker production and lower inventories. US soybean production forecasts increased to 4.535 billion bushels from 4.519 billion bushels due to a larger crop and higher exports.