The Next Major Oil Supply Shock Could Come From Saudi Arabia | OilPrice.com
Tom Kool
Tom majored in International Business at Amsterdam’s Higher School of Economics and later completed an Executive MBA in Energy Transition at the University of Groningen.…
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By Tom Kool – Oct 20, 2026, 11:11 AM CDT Updated: Oct 20, 2026, 11:25 AM CDT
Houthi strikes on Saudi oil infrastructure threaten production as Brent crude hits $108 and the Brent-WTI spread widens to $5.
The LNG Market Gets a New War Premium
– Asian liquefied natural gas prices soared to their highest since December 2022, as repeated attacks on tankers across the Middle East and Europe’s worsening winter outlook pushed JKM above $30 per MMBtu.
– Whilst China’s import giants – China and Japan – have been buying 8-10% less LNG year-on-year, seeking to maximize nuclear and renewable energy generation, Europe’s LNG imports averaged 175,000 tonnes over the past 30 days, up 9.5% compared to the 5-year seasonal average.
– The first Houthi attack on LNG shipping has added to the gas markets’ war risk premium, with UKMTO reporting strikes on a laden vessel that sought to transit the Strait of Bab el-Mandeb
– The Qatari-owned al Kharsaah appears to be the only LNG carrier that was near Yemen’s coast over the weekend, making a rare journey through the Red Sea to deliver Qatari LNG to Poland.
– Europe’s soaring TTF benchmark is paving the way for global LNG price increases, as the Old Continent’s inventory builds have effectively stopped, with EU-wide stocks capped below 75% of storage capacity.
Market Movers
– Qatari national gas company QatarEnergy has withdrawn its offer to sell up to 10 older steam turbine LNG carriers, seeking to ramp up transits of Hormuz instead, wary of using newer ships for the dangerous route.
– US oil giant Chevron (NYSE:CVX) signed a deal with the Egyptian government, detailing financial and commercial terms for Cyprus’ Aphrodite field, linking the offshore project to Egypt’s grid under a 15-year supply deal.
– Norway’s state oil giant Equinor (NYSE:EQNR) has reported a natural gas and condensate discovery in the Norwegian Sea, with the Lakris prospect holding 3-4 million boe and opening up the PL 1002 license block.
– Italian oil major ENI (BIT:ENI) is finalizing the launch of its Bouri gas utilization project, boosting the gas recovery from its offshore Bouri field in Libya by 0.7 bcm per year, all supplied to the domestic market.
– Kurdistan-focused upstream firm Gulf Keystone Petroleum (LON:GKP) agreed to merge with Norway’s ShaMaran Petroleum (OSL:SNM) in a $601 million all-share deal, creating the largest independent producer in northern Iraq.
Tuesday, October 20, 2026
The Saudi-Houthi conflict has been shaping the main supply narrative of this week, with Yemen’s militias extending their strikes beyond infrastructure sites to the Shaybah oilfield, raising risks that Saudi Arabia would be forced to shut in some production across the country. The expiry of the November WTI contract saw a much-awaited narrowing of global crude spreads, with ICE Brent trending $5 per barrel above the US benchmark, at $108 per barrel.
Asia Refiners Clash with Aramco Over 2027 Terms. The 2027 term contract talks of Saudi Aramco (TADAWUL:2222) with Asian refiners are stalled over whether spot purchases made during the US-Iran war count toward 2026 obligations, with some buyers resisting additional 2027 volumes.
Fuel Exports Keep China’s Refineries Running. China’s September crude throughput rose 0.6% from August to 14 million b/d, supported by strong product exports that offset weak domestic demand, defying a 21% year-on-year drop in crude imports as implied inventories declined by 530,000 b/d.
White House Unveils Harvest-Fuel Relief for Farmers. US President Trump announced an $8 billion USDA fuel relief program, offering one-time payments to farmers as the White House seeks to offset soaring diesel and fertilizer costs during the 2026 crop season, two weeks before the midterms.
Eastern Libya Approves Turkey Maritime Deal. Libya’s eastern parliament unanimously approved the 2019 Turkey maritime agreement, revoking its 2020 rejection and diplomatic boycott of Ankara, with Ankara potentially becoming the leading upstream player even in the Haftar-controlled east.
India Shelves Strategic Coal Import Mandate. The Indian government has deferred its proposal to mandate coal imports for domestic power plants despite many coal plants operating at critically low fuel levels, instead urging Coal India to raise output and railways to expedite domestic deliveries.
IEA Ready to Coordinate Further Oil Stock Releases. IEA chief Fatih Birol said members could coordinate further emergency oil releases, but insisted on prioritizing the immediate release of 20 million barrels of diesel and admitting that 2027 sees little chance of returning to normalcy.
Mozambique Shifts Force-Majeure Costs to Oil Firms. Mozambique <a href="https://cl
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