is giving back part of its two-day surge on Wednesday, September 16, 2026, but the pullback has done nothing to change a market that is short of barrels. West Texas Intermediate fell 1.80% to $103.90 in early trading and extended the decline below $103, trading at $103.20, down 2.5% from Tuesday’s settlement near $105.83. crude slipped 0.90% to $107.80 early and slid toward $106 later in the session after trading at $107.60. The -Brent spread stands at $4.40.
The context matters more than the daily move. Brent climbed to $109.21 on Tuesday, a four-month high, up 3.34% on the session. The benchmark is up 20.19% over the past month and 59.51% from a year ago. WTI traded as high as $107.38 intraday on Tuesday. Both benchmarks sit more than 20% above their early-August levels, when WTI settled at $84.67 and Brent traded at $87.38 after the OPEC+ meeting.
Three forces pulled prices lower on Wednesday. First, an industry survey reported a 7.14 million-barrel build in U.S. crude inventories for the week ending September 11. Second, Saudi Arabia began offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, easing fears that the shutdown of its East-West Pipeline would strand exports. Third, U.S. Energy Secretary Chris Wright said the pipeline outage should last only days.
The official data then undercut the bearish read. The Energy Information Administration reported that U.S. commercial crude inventories fell by 640,000 barrels to 423.4 million barrels, a draw rather than a build, although smaller than expected. Stocks at the Cushing, Oklahoma, delivery hub also declined. The 7.78 million-barrel gap between the industry estimate and the government figure is the story of this market: sentiment swings on headlines, but physical supply keeps tightening.
The thesis for this forecast is direct. The global oil market is running a structural deficit, with more than 10 million barrels per day of Gulf production shut in, global inventories down 400 million barrels this year, and the U.S. Strategic Petroleum Reserve at 285 million barrels, inside its operational minimum range. That deficit sets a floor under Brent near $100. The ceiling sits near $110, where Saudi rerouting, demand destruction and the Federal Reserve’s expected rate hike at 2:00 p.m. ET cap further gains. A pipeline outage that lasts weeks rather than days breaks the ceiling and targets $118, the first-quarter peak. A Russia-Ukraine energy truce and a fast Saudi restart test the $100 floor.
The Two-Day Surge: Saudi Pipeline Shut, Libya Halts, Brent Hits $109.21
Monday and Tuesday delivered the sharpest supply shock since fighting in the Gulf resumed on August 30, and the details explain why Wednesday’s pullback is shallow.
The central event is the shutdown of Saudi Arabia’s East-West Pipeline. Attacks launched from Iraqi territory forced the closure of the pipeline, which had been allocating up to 7 million barrels per day of Saudi crude to Red Sea export terminals. That route was Saudi Arabia’s primary alternative to the Persian Gulf, where Iran’s blockade on tankers has halted normal shipments through the Strait of Hormuz. With the pipeline offline, Saudi Arabia lost its most important bypass.
The prolonged disruption to Gulf tanker traffic had already forced major OPEC members to cut production. Saudi output recently dropped to its lowest level since 1990. The pipeline shutdown compounds that damage by removing export capacity from barrels still being produced.
Libya added a second supply hit. The national oil company suspended operations at two oilfields and a pumping station amid protests by the Petroleum Facilities Guard, which shut the Hamada-Zawiya crude-loading pipeline. Libya warned it could declare force majeure. Overall Libyan output has held near 1.4 million barrels per day so far, but any extended outage removes barrels from the Mediterranean market that European refiners depend on.
The market reaction was immediate. WTI jumped 2.64% to $104.10 in early trading on Tuesday, and Brent climbed 2.14% to $107.90. By the afternoon, WTI traded as high as $107.38 and Brent reached $109.21, the highest level in more than four months. WTI climbed roughly $11 per barrel over one week, and Brent gained more than $7.
The price move extended a rally that started in August. Brent had already hit $105 on September 10, when U.S. stocks fell for a fourth straight session. On September 9, Brent passed $101. WTI traded at $96.62 on September 13 before the weekend, meaning Tuesday’s high represented an $10.76 gain in two sessions.
The Houthi threat adds a third front. Iran-backed Houthi militants are advancing toward the Bab el-Mandeb Strait while intensifying attacks on Saudi targets and regional shipping. Saudi Arabia intercepted a Houthi drone launched toward Mecca on Wednesday, a claim the group denied. Bab el-Mandeb is the southern gateway to the Red Sea, the same waterway Saudi Arabia was using to bypass Hormuz. If the Houthis disrupt traffic there while the East-West Pipeline stays shut, Saudi Arabia would lose both of its main export alternatives.
The Inventory Data: EIA Draw of 640,000 Barrels Versus a 7.14 Million-Barrel Industry Build
The weekly U.S. inventory data produced a sharp contradiction on Wednesday, and resolving it matters for the near-term price outlook.
The industry survey released Tuesday afternoon estimated that U.S. crude inventories rose by 7.14 million barrels in the week ending September 11. That followed a 300,000-barrel decline the prior week. The same survey showed gasoline inventories rising 1.46 million barrels, reversing a 1.9 million-barrel draw, and distillate inventories gaining 1.61 million barrels on top of a 2 million-barrel increase the week before. A build of that size, during a global supply crisis, triggered Wednesday’s early selling.
The Energy Information Administration’s official Weekly Petroleum Status Report told a different story. Commercial crude inventories fell by 640,000 barrels to 423.4 million barrels. The draw was smaller than expected, but it was a draw, not a 7 million-barrel build. Cushing inventories also declined. The industry survey had shown Cushing falling 246,000 barrels after a 300,000-barrel drop the prior week.
The longer trend is unambiguous. On August 21, the EIA put commercial crude inventories at 428.9 million barrels. Three weeks later, stocks sit at 423.4 million, a 5.5 million-barrel decline. Commercial crude inventories excluding the SPR have lost just over 41 million barrels across the last 22 weeks, according to industry data. Cushing held 22.4 million barrels on August 21, a thin level for the delivery hub of the world’s most traded , and has continued to fall.
The Strategic Petroleum Reserve is the buffer that has kept commercial stocks from falling faster. Another 400,000 barrels left the SPR in the week ending September 11, bringing total reserve holdings to 285 million barrels. That is 446 million barrels below the reserve’s maximum capacity of 731 million, leaving it 39% full. The generally accepted operational minimum for the SPR sits between 250 million and 300 million barrels, below which the reserve may struggle to pump and process oil efficiently. At 285 million barrels, the SPR is already inside that range.
Product inventories are the tightest part of the market. Gasoline inventories were 5% below their five-year seasonal average before the latest report. Distillate inventories, which include diesel and heating oil, were 13% below the five-year average. The EIA forecasts that U.S. distillate inventories will drop below 100 million barrels in September and remain below the 2021–2025 five-year low through much of 2027.
The data points to a market with little room for error. The SPR cannot keep covering commercial draws for much longer, and product stocks are already critically low heading into the fall and winter demand season.
Global Supply: More Than 10 Million Barrels per Day Shut In
The international agency data shows a supply shock of historic scale, and it explains why prices have held above $100 despite demand losses and emergency releases.
According to the International Energy Agency’s September Oil Market Report, global oil production fell by 1.6 million barrels per day month over month to 100.1 million barrels per day in August. More than 10 million barrels per day of Gulf output remained shut in amid heightened security risks. The agency expects total oil supply to fall by 5.7 million barrels per day to 100.7 million barrels per day in 2026, with the expected recovery in Gulf production now deferred until 2027. Production is projected to rebound by 8 million barrels per day in 2027.
Non-OPEC+ supply is growing but cannot fill the gap. The Americas, led by the U.S., Canada, Brazil, Guyana and Argentina, are adding 1.4 million barrels per day of output in 2026 and 1 million barrels per day next year. That growth offsets less than a quarter of the Gulf shut-ins.
Refining capacity has taken a direct hit. Global refinery throughput reached a summer peak of 81.4 million barrels per day in August, up 960,000 barrels per day month over month, but 4.2 million barrels per day lower than a year earlier. Losses are spread across the Middle East, Russia and crude-importing economies in Asia. Global refinery runs are forecast to decline by 2.6 million barrels per day to 81.5 million barrels per day in 2026. Refining margins reached record levels in the Atlantic Basin in August, led by sharply higher diesel crack spreads, while surging freight rates weighed on Singapore refining profitability.
Sanctions and blockades add to the supply constraints. The U.S. renewed its blockade on Iran’s oil exports after Iranian attacks on tankers in the Strait of Hormuz. The Treasury Department’s Office of Foreign Assets Control imposed new rounds of sanctions targeting Iranian economic and oil interests. Attacks on Saudi Arabia’s oil exports through the Bab el-Mandeb Strait reduced exports departing from Saudi Red Sea terminals even before the East-West Pipeline shutdown.
Some flows have proved resilient. Crude, condensate and refined products moving through the Strait of Hormuz may have risen above 7.5 million barrels per day since fighting resumed on August 30, and the link between military developments in the strait and actual oil flows has weakened. Saudi Arabia is increasing crude exports through Hormuz with U.S. military assistance while its pipeline remains offline.
The supply picture drives the forecast floor. A market missing more than 10 million barrels per day of normal Gulf production, with global supply set to drop 5.7 million barrels per day this year, cannot sustain prices far below current levels without a major resolution to the conflict
