The Opener
Published
Monday evening's narrative, that Saudi price cuts and recovering Hormuz traffic were deflating the oil-supply scare, is already looking shaky by the early morning. Crude extended its slide to $88.43 a barrel, but the Vitol CEO Russell Hardy warned the Middle East has moved from a crude crisis into a refined-products crisis and now a shipping crisis, with ships going dark on AIS and inefficient ship-to-ship transfers in the Gulf of Oman. He put Middle East flows at only 12 million barrels a day of crude and 2 million of products over the past week to ten days, well short of the 10-14 million bpd he says is needed to stabilize the market, and said prices could reach $200 without it.
That warning lands alongside a fresh run of attacks inside Saudi Arabia: Jazan and Najran airports hit, an explosion reported in northern Riyadh, a Houthi missile strike on a Saudi camp in Jizan, and an unconfirmed Houthi attack on Abha Airport. The Brent Oil ETF is down 2.1% premarket, while the Saudi Arabia ETF is up 5.4%, a split that suggests markets are pricing both a demand-side hit from costlier energy and a domestic-risk premium on Saudi assets themselves.
Elsewhere the Ukraine-Russia exchange continues, with Moscow saying it struck data centers and port infrastructure in Ukraine after 650 drones were sent toward the Moscow region overnight. In Europe, von der Leyen announced a push for coordinated refinery talks, a methane-rule extension for exporters, and a new taskforce on energy demand and collective purchasing, alongside an EU oil coordination group meeting set for Wednesday, all signs Brussels is bracing for a prolonged energy squeeze. Germany's factory orders fell 10.6% month over month in August, far worse than expected, adding to that case. On the chip side, SK Hynix is down 2.5% and Western Digital down 2.1% following AMD CEO Lisa Su's comments that memory supply remains tight overall even as capacity expands. Constellation Energy and the Power Infrastructure ETF are both higher, up 3.1% and 2.5% respectively, alongside the Infrastructure ETF's 2.3% gain, consistent with investors leaning into energy and grid names as the geopolitical backdrop keeps commodity prices and utility demand in focus.