Bloomberg Television Sep 19, 2026
With Chris Kennedy, Lead for Economic Statecraft at Bloomberg Economics
Saudi Arabia has told European buyers they will not receive crude they already have under contract for next month, after an attack on the pipeline that carries Gulf oil across the country to the Red Sea.
The two pipelines that route around the Strait of Hormuz were the answer to a blocked strait. Chris Kennedy said one of them has now become a target in its own right, and it was the route carrying the largest share of the region's exports.
"We've seen now that flows through this pipeline can be disrupted by attacks from Iran aligned groups in Iraq and in Yemen."
Kennedy, lead for economic statecraft at Bloomberg Economics, on Bloomberg Television, wrote the piece the anchor opened the segment with, a study of the two straits the Gulf's oil now has to pass through. He joined from Washington.
The full segment is covered here so you can skip it.
Here are the 4 takeaways that matter.
Key Takeaways
Saudi Arabia is telling European countries they will miss contracted deliveries next month after the attack on the East-West pipeline
Kennedy said some movement could resume in days, or repairs could run a month or more
The Hormuz bypass has turned into a target rather than a refuge, reachable by Iran-aligned groups in Iraq and Yemen
Europe's answer to missing Middle East crude is to buy more American crude, and US exports were touching records again last week
US diesel is at a record high, and Kennedy said the crunch is not easing
JPMorgan's commodities team has stopped forecasting how the war ends, and Kennedy said he has come close to giving up on it himself
1. The Bypass Was Hit
Since the war began, crude produced inside the Persian Gulf has had three ways out: the Strait of Hormuz, which was disrupted early, a bypass route through the United Arab Emirates, and the East-West pipeline running to the Saudi port of Yanbu on the Red Sea. The Yanbu route then took the load.
The Yanbu pipeline had taken over a large share of Gulf exports before it was hit
In August, that pipeline accounted for about 4,000,000 barrels a day of exports. That's up from about 1,000,000 barrels a day prior to the war, and that was almost 30% of total exports from the Persian Gulf.
Chris Kennedy
The immediate consequence is contractual. Saudi Arabia is telling European countries they will be missing deliveries next month that they have already contracted for, Kennedy said.
How long the disruption lasts is not yet known
It's still a little too early to say how long this disruption will last. The Saudi Arabia claims that they'll be able to get some production or some movement through the pipeline in the next few days, but it could take a month or more to fully repair the pipeline.
Chris Kennedy
The longer-term point he drew from the attack is that the bypass no longer removes the risk of a blocked strait. Flows through the pipeline can be reached by Iran-aligned groups in Iraq and Yemen, which makes it "just another risk to the overall output from the region."
2. Europe Pulls US Barrels
The anchor asked what the missing Saudi cargoes mean for Europe. Kennedy said the crunch has moved from crude to refined products, and diesel is the one that matters, because it is the fuel that moves freight and other goods.
Europe short of Middle East crude means Europe buying more American crude
If they can't get crude from The Middle East to run into their refineries and turn into diesel and other products, they're gonna be pulling more from The US.
Chris Kennedy
US crude exports were again touching records last week, he said, and he expects that pressure to continue as countries look for alternative supplies. The pace of price rises has slowed a little, but US diesel is at a record high and he called that the story around the world.
The diesel squeeze is not letting up
But for the time being, we're not really seeing this crunch on diesel alleviate.
Chris Kennedy
3. No Baseline for the War
The anchor read from a JPMorgan commodities note, prefacing it by saying she does not normally read them. The bank's own words, as she read them on air: "for the first time since the start of Iran conflict, we don't have a baseline view. We simply don't know how to model the endgame." She asked how often a research team that sells forecasts says it has none.
The analyst on air said he has come close to the same place
I have to be honest. I've almost thrown my hands up several times over the past months as well.
Chris Kennedy
He relayed the gap the note identifies between what the market is priced for and what is actually being pumped.
The note has the market pricing in less oil than is being produced
And I think in their note, they referenced that the market is right now pricing in, about 4,000,000 barrels a day less than what we're seeing be produced globally.
Chris Kennedy
Three things drive that discount, on his account: the Middle East, continued Ukrainian attacks inside Russia, and the unknown timing of China restarting purchases. None of them is a supply-and-demand question a commodities desk is equipped to answer.
Geopolitics, not the barrel count, is setting the price
And so it's not entirely surprising, but it just tells you how much of the global oil market is being driven now by things that are really difficult to model.
Chris Kennedy
4. Greenland's Status Quo
The anchor turned to the president's announcement of a new security arrangement with Greenland and read a line from a piece by Bloomberg's Josh Wingrove: "It's unclear how the new deal materially changes the current security arrangement with Greenland." She asked whether the deal moves anything.
The deal is the status quo plus a promise to keep Chinese and Russian money out
I see it as basically the status quo with a few economic security commitments, so Greenland won't be host to major investments from the Chinese or Russians.
Chris Kennedy
Chinese investors have tried to buy into Greenland's mining sector before, he said, and those attempts went badly, because it is a hard place to operate in and they hit the same obstacles everyone else does. The value he sees in the announcement is that it may quiet the threats: if it keeps the White House from alluding to taking over the island, "I think that overall, that's probably good for the Transatlantic relationship."
Bonus Insights
The segment was built on a pun
Kennedy's piece is titled A tale of two straits. The anchor said it beat her own attempt at the same joke, Schrodinger's strait, which she has been trying to make happen.
The refining crisis now has its own weekly slot
The diesel discussion was introduced as a weekly segment on the global refining crisis, which is how often the show has judged the subject worth revisiting.
Kennedy's bottom line is that the variables now setting the oil price are political rather than commercial, which is why the bank the segment was named for has stopped publishing a view on how the war ends.
Products, Companies & Tools Mentioned
JPMorgan (Its commodities team dropped its baseline view for oil, telling clients it does not know how to model the endgame of the conflict)
The East-West pipeline and the port of Yanbu (Saudi Arabia's Red Sea export route around the Strait of Hormuz, and the asset that was attacked)
Books & Resources Mentioned
A tale of two straits (Kennedy's own piece on the Gulf's remaining export routes, which the segment was built around)
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