Brent Falls Toward $102 as Saudi Arabia Moves to Restore Its East-West Pipeline

Crude fell for a third consecutive session on Friday. Brent traded around $102 a barrel after Saudi Arabia signalled it can restore roughly half the capacity of its damaged East-West pipeline within days and the full line in about six weeks, moving barrels by sea in the meantime. Reports of the weekly move differ, with one count putting Brent down about 1.4% on the week and CNBC putting the loss near 1%.

The headline price understates the dislocation. The Japan Times reports that the Iran war has produced a larger loss of diesel supply than the US administration has acknowledged, erasing the oil surplus that forecasters expected for this year. Diesel is the fuel of freight, farming and construction, so a shortage there transmits into goods prices faster than a shortage of gasoline.

Iranian state media describes the demand side from Beijing's perspective. The Islamic Republic News Agency quotes an energy analyst describing China's renewed wave of crude buying as a defensive measure: keep refineries running, diversify sources of supply, protect strategic reserves and stop commercial inventories from draining too quickly. That behaviour keeps physical demand from falling even as futures prices decline.

Importing governments are already passing the relief through. Pakistan cut petrol by 1.65 rupees a litre and high-speed diesel by 0.88 rupees for the coming fortnight.