Oil slips as Saudi Arabia offers more crude via Oman

The immediate dip in oil prices, with Brent falling 2.7 percent, masks persistent market volatility. Saudi Arabia's rerouting of crude exports via Oman provides a temporary fix. However, the underlying issue of escalating tensions in the Middle East remains. Citi forecasts continued support for crude and refined fuel prices until the Strait of Hormuz reopens in Q4 2026.

For Asian refiners, Saudi Arabia's flexibility in offering crude via Oman's Sohar port is a short-term win. It ensures supply continuity despite attacks on the Yanbu export hub. However, the region's reliance on Middle Eastern diesel supply remains a vulnerability. Diesel is now the top concern in global oil markets, directly impacting Asian industrial and transport sectors.

The thing to watch is the Strait of Hormuz. Vessel passage was in the single digits at four on Tuesday, down from a 10-day average of 18. A sustained low passage rate would quickly negate any Saudi rerouting efforts. This would force Asian economies to scramble for alternative, more expensive, diesel sources.