Saudi Arabia will run out of oil stocks available for export if it does not restart its main pipeline to the Red Sea within days, according to Saudi oil buyers and traders cited by Reuters. The warning puts a clock on a supply problem that has already moved global prices.
The pipeline problem
The East-West pipeline lets Saudi Arabia move crude to Red Sea terminals without sending tankers through the Strait of Hormuz, which is still largely closed to normal commercial shipping. The line shut down after attacks last week. Iran's foreign minister denied on Monday that Tehran was involved.
Those buyers and traders now say the kingdom's exportable inventories are running down. Brent crude crossed $107 a barrel on Monday, a near four-month high, as the diplomatic track stalled. The Houthi advance along Yemen's Red Sea coast has added to pressure on Saudi exports.
Washington weighs emergency powers
The White House is considering how to use the Defense Production Act to expand US oil refining capacity, according to two sources familiar with the plans. The conflict with Iran has exposed how exposed American fuel markets are to a global crude shock.
The pain is visible at the pump. Diesel in the United States hit a record $6 a gallon in early September. Shipping companies are also weighing longer routes, which add weeks to voyages and push up freight and insurance costs.
Inflation complicates the Fed's next move
Energy costs are feeding into broader price pressure. US consumer prices accelerated in August, and a key measure of underlying inflation posted its largest increase in four months. That reinforced expectations that the Federal Reserve will raise interest rates at its meeting next week.
President Donald Trump said on Sunday that no country should have lower interest rates than the United States, days before the Fed decides. Higher rates would raise borrowing costs for companies already carrying heavy spending plans.
Elsewhere in corporate news, Oracle shares are down nearly 23 percent this year. Chairman Larry Ellison cancelled plans to sell about $7.5 billion of shares, and the firm has begun cutting thousands of jobs. Tesla chief executive Elon Musk said the company will unveil its long-delayed Roadster on October 1. Boeing and its engineering union reached a tentative contract agreement on Friday.