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Summary:
- Satellite imagery reportedly shows fire hotspots at multiple points along Saudi Arabia’s East-West pipeline near Medina, fuelling unverified claims of a Houthi strike; no confirmation has come from Aramco, Saudi authorities or wire services
- Oil prices held near Thursday’s multi-year highs
- The pipeline, also known as Petroline, is Saudi Arabia’s main export route bypassing the closed Strait of Hormuz, carrying crude roughly 1,200 kilometres from the Eastern Province to the Red Sea port of Yanbu; it was hit in a confirmed attack in April that cut throughput by around 700,000 barrels per day
- The US 10-year Treasury yield rose above 4.97%, its highest level since October 2023 and nearing that year’s peak
- Gold slipped toward $4,300
- Japan’s corporate goods price index rose 7.6% year on year in August, above the 7.4% forecast, reinforcing expectations the Bank of Japan will raise rates to 1.25% at next week’s meeting
- Asia-Pacific equities fell broadly at the open, with the Nikkei now down nearly 3% and the Kospi down around 2.5%, as surging oil and rising yields weighed on risk sentiment amid the widening Iran war
Oil prices held near Thursday’s multi-year highs on Friday as satellite imagery reportedly showing “catstrophic” (according to some reports) fire hotspots along Saudi Arabia’s East-West pipeline fuelled unverified reports of a Houthi strike on the route. A comparison of Sentinel-3 satellite passes from September 9 and 10, cited by open-source researchers, appeared to show a large smoke plume and elevated thermal signature near the pipeline close to Medina, with multiple hotspots detected along the route at roughly the same time. As of writing, no confirmation of the reported strike had come from Saudi Aramco, Saudi authorities or established wire services, and the claims should be treated as unverified pending official comment.
The pipeline in question, also known as Petroline, is one of Saudi Arabia’s key alternatives to the Strait of Hormuz, carrying crude roughly 1,200 kilometres from the Eastern Province to the Red Sea port of Yanbu. It has a stated capacity of up to seven million barrels per day, with roughly five million barrels per day used for direct export and a further two million barrels per day routed to refineries for processing. The route has been targeted before, including a confirmed attack in April that cut throughput by an estimated 700,000 barrels per day. Should the latest reports be verified and shown to have meaningfully disabled sections of the pipeline, market participants widely view this as the kind of event capable of materially disrupting Saudi export capacity, given the route’s role as the kingdom’s principal bypass for the closed Strait of Hormuz amid the ongoing Iran war.
Elsewhere in markets, the US 10-year Treasury yield extended its rise to above 4.97%, its highest level since October 2023 and closing in on that year’s peak. Gold drifted lower, slipping toward $4,300. In Japan, data released Friday showed the corporate goods price index rose 7.6% year on year in August, ahead of the 7.4% forecast, with import prices up 24.8% on continued yen weakness. The reading reinforces market expectations that the Bank of Japan will raise its policy rate to 1.25% at next week’s meeting, a move markets had already largely priced in.
Asia-Pacific equities fell broadly at the open as the combination of surging oil prices, rising bond yields and the widening Iran war, including concerns over shipping through the Bab al-Mandab Strait, weighed on risk sentiment. Japan’s Nikkei was down nearly 3% and South Korea’s Kospi fell around 2.5% in early trading, extending losses tied to the broader geopolitical and inflation-driven pressure building across markets this week.
This article was written by Eamonn Sheridan at investinglive.com.