The Commodities Feed: Saudi supply uncertainty has oil extending gains
Per the full note from ING's commodities desk, oil remains firmly bid with ICE Brent settling above $105/bbl after an intraday spike to just under $110, supported by the shutdown of Saudi Arabia's 7m b/d East-West pipeline and persistent Middle East escalation. The desk argues the floor is unlikely to give way until markets get clarity on Saudi supply, with reports suggesting the pipeline could be offline for weeks. Trump's comments on a potential Iran deal and a Russia-Ukraine energy infrastructure truce have done little to relieve product markets, as the ICE gasoil crack sits near record highs above $80/bbl. With no internal FX coverage on the relevant pairs and no high-impact events on the near-term calendar, this is a pure commodity-driven macro signal for FX desks to digest via terms-of-trade and inflation channels.
What the desk is arguing
Per the full note , ING's commodities team frames the oil market as firmly supported, with the floor unlikely to give way until there is clearer visibility on Saudi supply following the East-West pipeline shutdown. The desk emphasizes that despite President Trump's comments suggesting Iran is keen to make a deal and that Russia and Ukraine have agreed to stop hitting each other's energy infrastructure, the market has shown little relief.
The supporting evidence is stark: ICE Brent traded to an intraday high of just below $110/bbl, a level that has capped the market for three consecutive days, before settling over 1% higher at $105.68/bbl. The 7m b/d East-West pipeline outage is the key supply shock, with reports suggesting it could be offline for several weeks and Saudi port stocks at Yanbu only sufficient to sustain exports for several days. The risk that port stocks run out before the pipeline resumes is explicitly flagged, and efforts to redirect exports via the Strait of Hormuz are complicated by existing disruptions there.
The alternative read would be that diplomatic progress — Trump's openness to an Iran deal and the Russia-Ukraine energy truce — should compress risk premia. But the desk implicitly rejects this by noting that middle distillate cracks remain near record levels, with the ICE gasoil crack above $80/bbl, suggesting the physical market is not buying the de-escalation narrative.
How other firms see it
Given the absence of internal FX coverage on the relevant pairs, there are no aligned or contrary firm stances to group. The desk's commodity view intersects with FX through the terms-of-trade channel and inflation expectations, but no firm-level targets are available to cross-reference.
Traders should watch related indicators such as the ICE gasoil crack and Brent front-month futures for spillover into energy-importing currencies and central bank policy expectations. The oil supply shock also has implications for the US dollar via safe-haven flows and for commodity-linked currencies like the Norwegian krone and Canadian dollar.
What the calendar says
No high-impact events are scheduled in the next 30 days for the relevant jurisdictions, so there is no calendar catalyst to cross-reference. The desk's view remains driven by geopolitical supply developments rather than scheduled data releases.
Key takeaways
- 01ICE Brent settled above $105/bbl after touching just below $110, with ING flagging $110 as a key resistance level tested three times.
- 02Saudi Arabia's 7m b/d East-West pipeline shutdown is the primary supply shock; reports suggest it could be offline for weeks.
- 03Middle distillate cracks remain near record highs, with the ICE gasoil crack above $80/bbl, indicating little relief from diplomatic headlines.
- 04The oil floor is likely to hold until clarity on Saudi supply emerges, keeping inflation and terms-of-trade risks elevated for FX markets.
Market implications
Watch ICE Brent's ability to break and hold above the $110/bbl level that has capped gains for three days; a sustained break would reinforce the supply-driven bid and likely spill over into energy-importing currencies and inflation breakevens. The ICE gasoil crack above $80/bbl is the key product-market signal to monitor, as continued strength would suggest the physical market is ignoring diplomatic de-escalation and could force central banks to maintain a hawkish tilt.
Risks to this view
The call is invalidated if the East-West pipeline resumes sooner than the several-week estimate and Saudi port stocks at Yanbu prove sufficient to bridge the gap without export disruptions, which would remove the supply premium. Additionally, a genuine Iran nuclear deal or a verified Russia-Ukraine energy infrastructure truce could compress geopolitical risk premia, potentially sending Brent back toward the lower end of its recent range and easing product cracks.
Articles The Commodities Feed: Saudi supply uncertainty has oil extending gains Published 02:34 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices remain firmly supported, with that floor unlikely to give way until markets get clearer visibility on Saudi supply after the East–West pipeline shutdown Warren Patterson and Ewa Manthey Energy – Saudi supply uncertainty Oil prices surged yesterday amid broader escalation in the Middle East and the shutdown of Saudi Arabia’s 7m b/d East-West pipeline. ICE Brent traded to an intraday high of just below $110/bbl, a level at which the market has faced tough resistance over the last 3 days. Front-month futures eventually settled a little over 1% higher on the day at $105.68/bbl, following comments from President Trump on both Iran and Russia/Ukraine.
Trump posted that Iran is keen to make a deal and said he’s open to it. He also said that Russia and Ukraine have agreed to stop hitting each other’s energy infrastructure. Attacks on Russian refining infrastructure have tightened the global diesel market.
Plenty of uncertainty remains over the extent of damage and the duration of the outage for the East-West pipeline in Saudi Arabia. Prices are likely to remain well supported until we get clarity. Reports suggest the pipeline could be offline for several weeks.
The Saudis have oil in storage tanks at Yanbu, which should sustain exports for several days. The risk is that port stocks run out before the pipeline resumes. Some suggest the Saudis are looking to increase exports via the Strait of Hormuz amid the pipeline outage.
Given the disruptions in the Strait of Hormuz, that may be easier said than done. Despite Trump stating that Russia and Ukraine agreed to halt hitting each other’s energy infrastructure, we’ve seen little relief in middle distillate cracks. The ICE gasoil crack remains above $80/bbl and near record levels.
This suggests the market may be a bit sceptical about the agreement. Also, Russia continues to have a diesel export ban in place for now. This is set to continue until the end of this month.
We could see some easing in middle distillate cracks if Russia lifts the export ban. However, that would require easing attacks on Russian refineries. Given the tightness in diesel markets, including in the US, there’s growing noise around potential US export controls on oil and refined products.
The US administration is pushing back on the idea, saying that an export ban would do little to lower prices. While a ban on refined products may offer some immediate price relief, it would weigh on refinery margins and eventually lead refiners to reduce run rates, meaning higher prices over the longer term. European natural gas prices remain well supported, with TTF trading well above EUR80/MWh.
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