Drone strikes launched from Iraq damaged a pumping station on Saudi Arabia's East-West pipeline, and Scott Modell says the repair estimates run from two to four weeks all the way out to two to four months.
Most of the market is treating the strike as a supply interruption with a known end date. Modell's argument is that the interruption is the small part: the same attackers can do it again, the war in Yemen is going worse than the price implies, and the United States has already tried and failed to stop the group in question.
"I don't think it's an overstatement to say that this officially recognized Saudi government in the south is on the verge of collapse."
Modell runs Rapidan Energy Group, whose business is pricing exactly this kind of political risk into oil, and he came on having already been warning clients that prices and risks were going higher.
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👤 Guest: Scott Modell, CEO of Rapidan Energy Group, a consultancy that prices geopolitical risk into the oil market
🎙️ Hosts: Carl Quintanilla and Sara Eisen, anchors of CNBC's Squawk on the Street
👥 Also on: InfoHawk's Rob Leathern, Melius Research's Ben Reitzes and JPMorgan Asset Management's Jack Caffrey, in separate segments of the same hour
📰 Published: 14 September 2026 on the Squawk on the Street podcast feed (CNBC)
🟣 Apple Podcasts | 🔗 Segment page | ⏱️ length not available
Key Takeaways
The East-West pipeline could be down for anything from two weeks to four months
Saudi Arabia can draw on stored barrels at Yanbu for a couple more weeks, then exports fall sharply
The attack succeeded because this kind of attack cannot reliably be stopped
It was Iraqi militias, quiet for most of a year, choosing the worst possible moment
Yemen, not the pipeline, is the thing he says is most worrying
A 52-day US bombing campaign did not remove the Houthis, and he says Trump conceded it
Trump has decided the diesel problem is Ukraine's strikes on Russian refineries
Modell expects those strikes to pause and then resume as winter approaches
1. The Pipeline Math
The desk set the segment up: energy prices rising again after Saudi Arabia shut a critical pipeline that bypasses the Strait of Hormuz, after drone strikes launched from Iraq on Thursday damaged a pumping station along it. The anchors noted that Modell's firm had been warning about higher oil prices and rising risks, and asked what supply now looks like.
The outage has no fixed end. "With the East West pipeline shutdown and with estimates ranging from 2 to 4 weeks to 2 to 4 months for it to come back online."
The pipeline's job is to move barrels to Yanbu on the Red Sea, so that exports do not have to pass through the Gulf. With it down, he said, the offsets that had been available through those moves keep shrinking.
The buffer is stored oil at the export point: "Estimates range from, you know, eight to 10 or 15 million barrels of storage."
"So I think they can still continue to take out of storage and ship out of Yanbu for the next couple of weeks. But if they don't fix that soon, you're going to see a sharp drop in export moves."
2. Why It Wasn't Stopped
Asked how vulnerable the pipeline is and what would prevent another strike on it, Modell said the honest answer is that very little would.
"I think it's very vulnerable." He said people keep asking him how Saudi Arabia, the United States and their allies failed to prevent this.
"I think these things are very difficult to stop." His broader read is that the Iranians and their proxies "have been able to show they can hit just about anything they want at will," which he called a depressing reality.
The attackers had been dormant: "This was done by the Iraqi militias. The Iraqi militias have been quiet for the better part of the last year or so." They came back, in his words, at what could not be a worse time.
3. Yemen Is the Real Risk
Modell steered the conversation away from the pipeline to what he says is the more worrying situation, and Eisen asked whether he meant more strikes.
"It's a full on war in between the Saudis and the groups that they backed versus the Houthis."
"And the Houthis are making gains all along the southern coast of the Red Sea, and it makes it easier for them to attack things."
"I don't think it's an overstatement to say that this officially recognized Saudi government in the south is on the verge of collapse."
He put a clock on it: "So don't be surprised. In the next 24 to 48 hours, if you see big announcements about even more destruction and setbacks of the officially recognized government." That would mean the Houthis taking more control of critical infrastructure.
The consequence he draws is wider than Yemen: more risk to Saudi Arabia itself, to shipping in the Red Sea, and to commercial traffic through the Mandeb Strait.
4. Why the US Sits Out
The desk asked the obvious question — the United States clearly could do something about the Houthis, so why doesn't it?
The US already tried. "I think if you remember Operation Rough Rider, President Trump said, hey, we are going to do something about the Houthis."
"And for 52 days, we bombed them 2000 times or so." Targets in Sana'a were destroyed and leaders were killed, he said, "And they were still standing."
"And even President Trump had to step back and say, wow, these guys were a lot tougher and stronger and more resilient than we thought."
The second reason is bandwidth. "I think part of it is he has his hands full in Hormuz," where Modell says the effort is to normalize flows back toward something close to pre-conflict levels.
The third is advice the president is getting, which Modell relayed as: sit back, the Iranians are going to collapse, "This economic blockade is going to work."
"But part of it is I don't think he wants to take on two conflicts at the same time."
5. Diesel, Russia, Ukraine
Modell said Trump had just posted about diesel, having been asked about it over the weekend while in Ireland, and that the president has reached a particular conclusion about the cause.
"He seems to be convinced that the trouble in diesel is about Ukraine, Russia and Ukraine's aggression in trying to fight back against Putin."
A host asked what share of exports that is, suggesting maybe 9%. Modell answered with Russia's position rather than the number: it is the second-largest exporter of diesel in the world and has shut in exports, so "It's a big deal."
On the diesel price itself: "And I think it's $6 now. They've hit record levels."
"He's looking around and he's saying a big problem is that Russian diesel is off the market."
His forecast is a pause rather than a change of policy. He expects Volodymyr Zelenskyy and the Ukrainians to oblige to some degree by reducing strikes on Russian refineries — "But heading into the winter, it's just going to be too tempting for them to go back to those targets of opportunity."
"And I only say that because Trump doesn't have total control over the Ukrainians. And the war shows no signs of ending in Ukraine."
6. Where Oil Goes
Eisen asked where he sees prices heading, and said it sounds higher by any measure.
Rapidan's published view was set before this: "a couple of weeks ago, we had a four Q 26 average of around $100 per barrel."
Asked for his view with a gun to his head, he listed what has changed: "Chinese stockpiling going up, inventory draws continuing, the Houthis escalating."
He added Iran's own stated intention, which he relayed in their voice: they will escalate into the midterms, and "We're not satisfied with 108 or $110." The reason he gives for that posture is that the oil price is what they believe the president actually reacts to.
Bonus Insights
The desk's own framing carried the market numbers: "WTI and Brent futures now up nearly 20% so far this month," and the point that the damaged pipeline is the route that lets Saudi crude avoid the Strait of Hormuz entirely.
The diesel question reached the president abroad. Modell said Trump had been asked about it over the weekend while in Ireland and posted about it afterward.
Modell's bottom line is that the market is pricing a pipeline repair when the real exposure is political: the same militias can strike again at will, the Houthis are gaining ground rather than losing it, and Washington has neither the appetite nor the demonstrated ability to stop them.
Products, Companies & Tools Mentioned
Rapidan Energy Group (Modell's firm, which had been warning clients on higher oil prices and rising geopolitical risk, and whose published fourth-quarter 2026 view he says was around $100 a barrel)
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