JPMorgan: Mideast Oil Exports Bypass Pipeline Hit, Signals Hold

The takeaway is that the outage's supply impact has proven less severe than anticipated, which helps account for oil's three-session decline last week despite Houthi attacks. The risk premium remains in place because the alternative route depends on the Strait of Hormuz remaining open, linking the two critical passages in a single narrative. With WTI near $100 and Brent above that level, prices already factor in a substantial security premium, so further upside demands a new disruption, while downside requires evidence that the flows are durable. Market participants will watch weekly shipping and export figures to verify that the recovery is genuine and not a temporary fluctuation.

--- Flows are proving more resilient than anticipated, but with volumes roughly 6 million barrels per day below last year's average, JPMorgan's "surprisingly strong" is a relative assessment.

Summary:

• In a September 18 note, JPMorgan analysts observed that Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia's East-West pipeline.
• Over the last 10 days, total flows averaged about 17 million barrels per day, approximately 6 million below the 2025 average.
• The most significant shift has been from Saudi Arabia, with satellite data showing Saudi oil transiting the Strait of Hormuz at about 3 million barrels per day over the past six days, up from roughly 700,000 in August.
• Total Saudi exports were approximately 5 million barrels per day on a 10-day average, according to JPMorgan's Natasha Kaneva.
• Oil declined for a third consecutive session on Friday, with WTI closing near $100 and Brent higher, as the market saw the pipeline outage as less disruptive than feared.
• Rapidan Energy Group warns that the risk remains tilted toward a larger disruption if the outage persists beyond September or if Iran, the Houthis, or other proxies escalate. Iranian sources say China has asked Iran to curb the Houthis following a Saudi appeal.

Middle East oil flows are performing better than expected despite the outage on Saudi Arabia's East-West pipeline, according to JPMorgan. In a note dated September 18, the bank's analysts stated that flows are surprisingly strong. Natasha Kaneva, the bank's head of global commodities strategy, is cited as the author in media reports.

JPMorgan estimates that Middle East oil flows have averaged about 17 million barrels per day over the last 10 days, roughly 6 million below the 2025 average, indicating a partial recovery measured against a deficit rather than a return to normal. The analysts highlighted Saudi Arabia as the most notable source of change. Satellite data showed Saudi oil moving through the Strait of Hormuz at about 3 million barrels per day over the past six days, up from around 700,000 in August. Kaneva noted the kingdom's total exports were about 5 million barrels per day on a 10-day moving average.

The pipeline, which runs from Saudi Arabia's Eastern Province to the Red Sea port of Yanbu, was hit by a drone attack last week. The note suggests that rerouting cargoes via Hormuz has compensated for much of the loss. Oil prices reflected this on Friday, dropping for a third session to end the week roughly flat, with US crude closing near $100 a barrel and Brent slightly higher. On Monday, Reuters reported that oil eased as investors weighed the Saudi export recovery, even after the Houthis targeted Riyadh.

The situation remains precarious. Rapidan Energy Group, in a Thursday note, said the risk remains slanted toward a larger disruption if the pipeline outage lasts beyond September, or if Iran, the Houthis, or other proxy groups intensify their attacks. Meanwhile, three Iranian sources told Reuters that China has asked Iran to help restrain the Houthis after Saudi Arabia appealed to Beijing following the attacks.

The two dominant oil stories this week are interconnected. US Central Command over the weekend said shipments via Hormuz hit a six-month high, and JPMorgan's data suggest Saudi Arabia is relying on that same route to replace the pipeline. This makes the strait the single most critical point, as any disruption would now affect both Gulf flows and the Saudi workaround. The comparison with 2025 also underscores that "strong" means flows are about a quarter lower than last year's level.