Oil is getting cheaper in anticipation of the restoration of Saudi Arabia's key oil pipeline

Oil prices continued to decline after sharp gains in previous days amid signs that supply disruptions from the Middle East may ease. Brent is trading near $106 per barrel, while U.S. WTI is above $102.

Earlier on Wednesday, Brent was heading toward $108 per barrel after gaining about 4% over the previous two sessions, while WTI was trading near $105. By the end of Wednesday, the international benchmark had fallen by 2.7%.

The main reason for the shift in market sentiment was the prospects for restoration of Saudi Arabia's East-West pipeline, damaged by attacks last week. According to Bloomberg, Saudi Arabia expects to restore about half of its capacity within a few days, and fully resume operations in about six weeks.

The pipeline crosses Saudi Arabia from east to west and allows oil to be transported to the Red Sea coast, bypassing the Strait of Hormuz. After the escalation of the war between the U.S. and Iran and a sharp reduction in traffic through Hormuz, this route has become one of the key alternative channels for oil exports from the Persian Gulf.

Its damage last week heightened fears of a supply shortage and became one of the factors behind the new price surge. Now the prospect of a partial restart of the pipeline reduces the risk premium, although the market remains tense.

An additional factor for the market was data on U.S. oil inventories. According to official statistics, last week they decreased by 640,000 barrels to 423.4 million barrels. The decline was smaller than market expectations, which also prevented prices from quickly returning to recent highs.

Despite the current decline, oil remains significantly more expensive than at the beginning of the year. Brent has risen by about three-quarters since the start of 2026 due to supply disruptions in the Middle East and the ongoing Russian-Ukrainian war. High oil and fuel prices are already adding to global inflationary pressure and have become one of the factors that the U.S. Federal Reserve is watching as it tightens monetary policy.

Based on materials from: Bloomberg, Trading Economics