WTI Whipsaws as Gulf Supply Improves and Middle East Risk Returns

As November WTI crude oil futures experienced a week of volatility, Gulf crude flows improved while Middle East risks resurfaced. Saudi Arabia restarted the East-West Pipeline and resumed tanker loadings at Yanbu, restoring an export route to the Red Sea. Despite this supply relief, diesel, gasoline, and jet-fuel flows remained constrained due to Russia's restrictions on diesel exports and China's reduced refined-product cargoes from the export market.

Reports emerged that the United States was deploying a third carrier strike group to the Middle East, which brought back the escalation premium into the trade. WTI crude oil futures closed at $93.00 on Thursday, up $0.56 or 0.61% for the week, trading between $88.58 and $96.54. Gulf barrels provided sellers with a positive outlook, with Saudi Arabia's pipeline restoration and improved exports estimated to reach 23.3 million barrels per day, nearing the 2025 average.

However, the recovery was not complete as JPMorgan's 10-day measure remained lower at 20.5 million barrels per day, or 89% of normal. Producers relied on ship-to-ship transfers, military escorts, and altered loading plans to keep exports moving, but the process was costly and susceptible to further disruptions.

OPEC was expected to maintain November production targets unchanged, leaving traders focused on whether Gulf flows could sustain their recent recovery. Diesel prices carried the premium as refined-product shipments from the region remained below pre-war levels, forcing end-users to compete for a smaller pool of finished fuel. China tightened product exports, suspending oil-product shipments beyond Hong Kong and Macau, adding to concerns about the market's ability to handle finished fuel.