Saudi Aramco Strikes, Export Arbs, and the Guernsey Bottleneck

Marcus Hayes

Wednesday, October fourteenth. Here's what moved, and what it does to Rockies barrels.

Marcus Hayes

Global first. Following up on Tuesday's brief, the Houthi campaign escalated overnight. Reuters reported loud booms near Saudi Aramco's headquarters in Dhahran Tuesday night, with six sources describing a fire and an evacuation order. Aramco told employees to work from home Wednesday. The Saudi Energy Ministry, per the Wall Street Journal, confirmed an administrative building was targeted, with a limited fire and no casualties reported. People familiar told the Journal the missile hit an office building and damaged a number of floors. Civil defense sirens and a boom followed in Riyadh. This comes right after the weekend airport strike, and Reuters has the Houthis vowing more attacks on Saudi airports and oil facilities. I have no confirmed report of lost production or exports from this strike. It hit corporate offices, but it's a signal about reach.

Marcus Hayes

On price, Brent settled Tuesday near one hundred five dollars and sixty cents, slipping about one percent at points as the market absorbed temporary U.S. sanctions relief on roughly three hundred thousand metric tons of Russian diesel. Then it rebounded early Wednesday toward one hundred six fifty to one hundred seven. Morgan Stanley now has Dated Brent at one hundred five dollars for the fourth quarter and one hundred for the first quarter of 2027, and it's citing dirty tanker freight and transit risk.

Marcus Hayes

The OPEC Monthly Oil Market Report did publish Tuesday, the one we were waiting on. OPEC cut 2026 demand growth to two hundred thousand barrels per day, down from four hundred thousand in September. That's OECD easing by two hundred thousand, partly offset by four hundred thousand of non-OECD growth. It raised 2027 demand growth to two point six million barrels per day, from two point four, on the expectation of commercial inventory rebuilding after the conflict. OPEC plus output rose nine hundred thousand barrels per day in September to thirty nine point oh seven million, led by Saudi Arabia. So the demand cut is a headline, but the physical story is still supply risk.

Marcus Hayes

North America. Western Canadian Select for November at Hardisty is around twenty five fifty five under W T I, near multi year wides. Soft Gulf Coast heavy refining margins, high tanker freight, and winter diluent blending, which adds about thirty percent to batch volume, are all weighing. Trunklines are around ninety three percent utilized. Express to Casper is running full at two hundred eighty thousand barrels per day, and Trans Mountain is holding near sixty percent, about four hundred twenty five thousand barrels per day to Westridge. Mexico, nothing material.

Marcus Hayes

United States. Important desk note: the E I A Weekly Petroleum Status Report does not release today. Because of Monday's federal holiday, it comes Thursday, October fifteenth, at noon Eastern. So the baseline is still last week's print: commercial crude drew three point one eight six million barrels to four hundred twenty four point one million, against a consensus build of one point seven two two million. Cushing built four hundred forty four thousand barrels to twenty four point seven million. PADD two built one point eight seven two million to about one hundred seven million on seasonal maintenance. PADD four, the Rockies, drew one hundred forty four thousand barrels to twenty two point three five million. Refinery runs were ninety two point seven percent of capacity. I don't have a published consensus for Thursday, so I won't give you one. Hurricane Isaias shut in an estimated five hundred thousand to five hundred twelve thousand barrels per day of Gulf output, roughly a quarter of offshore supply, and that shows up in coming prints.

Marcus Hayes

W T I settled Tuesday near ninety two eighty and ticked toward ninety four to ninety four eighty this morning. The Brent to W T I spread is twelve fifty to thirteen twenty five, and that keeps the pull toward the Gulf Coast strong. On deals, the desk is digesting Enbridge's two point five five billion dollar Tallgrass crude logistics buyout, and Hess Midstream's two hundred million dollar purchase of Chevron's D J Basin gathering, which includes a twenty percent stake in Saddlehorn. Treat both as headline level until we see terms.

Marcus Hayes

Uinta Basin. Yellow wax is indicated at ten to fourteen dollars under Cushing at the wellhead. Gulf Coast delivered waxy bids sit around three twenty over W T I, so roughly ninety six to ninety seven dollars. Heated insulated railcars to the Gulf run sixteen to eighteen dollars, which puts the netback at seventy eight to eighty one dollars, or twelve to fourteen eighty under Cushing. That's equal to or worse than local posted prices, so spot rail stays shut, same as Tuesday. Only minimum volume commitment barrels are moving. Salt Lake City's five refiners are at their waxy ceiling of about eighty thousand barrels per day, and basin rail loadings hold near one hundred fifteen thousand. Energy Transfer's Price River terminal is still slated for a fourth quarter start, pending Utah air permitting. Wildcat is expanding Helper in phases from twenty thousand toward one hundred thousand. The Uinta Basin Railway is stalled, with no physical construction. It's waiting on the D C Circuit remand on the Surface Transportation Board, Forest Service right of way reissuance, and Seven County bond financing. Operators, including Crescent Point Veren, Ovintiv, Scout, XCL, and SM, report planned completions and no disruptions.

Marcus Hayes

Bakken. North Dakota's latest Director's Cut has state crude at one point one five three million barrels per day with thirty three rigs. Gas capture is around ninety six percent, with about one hundred thirty million cubic feet per day flared. Nothing new there. Dakota Access is effectively full at seven hundred fifty thousand barrels per day, with negligible uncommitted space. Committed tariffs run five sixteen to seven fifty six, uncommitted nine seventy five. Rail to the Pacific Northwest or East Coast costs ten to fifteen dollars all in, so even with a twelve fifty Brent premium, rail doesn't beat uncommitted pipe. Spot crude by rail stays subdued. Chevron is cutting Williston rigs from three to two by December, and Hess Midstream sees Bakken throughput down about five percent in 2027 before flattening.

Marcus Hayes

Powder River. Anschutz, Continental, Devon, EOG, and Peak are drilling and completing at a steady pace. Gathering takeaway is adequate, and the constraint shows up downstream at Guernsey. Plains continues integrating its five hundred eighty five million dollar Silver Creek gathering acquisition.

Marcus Hayes

Now GERN-zee, the section that matters. Guernsey light sweet is indicated steady at eighty five cents over Cushing. Clearbrook is assessed one fifty to two ten under Guernsey, so sixty five cents to a dollar twenty five under Cushing. That's the screen. The physical picture is tighter than the screen, so don't trust that premium as a netback.

Marcus Hayes

Pony Express, four hundred thirty thousand barrels per day of system capacity and moving about two hundred thirty thousand out of GERN-zee, remains heavily apportioned. The Tallgrass and Bridger binding open season did not add physical pipe. Platte, roughly one hundred forty five thousand barrels per day toward Wood River and Patoka, is under severe proration. Saddlehorn and Grand Mesa are near full absorbing D J Basin barrels into Cushing. Add Double H, where Kinder Morgan's conversion to N G L service has removed sixty five to eighty eight thousand barrels per day of crude egress toward GERN-zee. That pushes volume onto Bridger, Belle Fourche, and Enbridge's North Dakota line to Clearbrook, which is running above ninety percent full.

Marcus Hayes

So here's the squeeze. Twelve fifty to thirteen twenty five on Brent to W T I says the Gulf Coast is where every inland barrel wants to go. But Cushing is the only pipeline gateway south, and GERN-zee is the door to it. A barrel apportioned off Pony or Platte has two exits. One is north and east to Clearbrook, into a Midwest market that just built crude on refinery turnarounds. The other is rail at ten to fifteen dollars, which gives away the spread. Apportionment, not the differential, is capping Rockies and Bakken netbacks.

Marcus Hayes

Watch the E I A at noon Eastern tomorrow, and Dhahran headlines before that. That's the brief.