Measuring Impacts and Easing Tensions of the Middle East War on Global Oil Markets

Saudi Aramco, the world's largest oil company, temporarily halted exports on Thursday, July 26 through the Red Sea's Bab el Mandeb strait after it reported that two of its 2-million-barrel capacity oil tankers were attacked by Iranian-backed Houthi rebels the previous day.

At Orbital Insight, we're closely monitoring the unfolding situation, as the impacts of this disruption can have wide-reaching effects on global oil supply and demand. Our vantage point is unique and through our real-time utilization of satellite imagery and artificial intelligence, we have observed an ongoing increase in Saudi crude inventories prior to the current hostilities, and we can expect a further build-up as exports are constrained.

Orbital Insight's data show that oil inventories in Saudi Arabia jumped by about 3.5 million barrels just before the attack was reported.  Brent crude futures rose 61 cents, or 0.825% last Thursday, indicating that market participants didn't expect an extended outage. At about 87 million barrels, Saudi Arabia's oil inventories are up about 1.25 million barrels year-on-year, according to Orbital Insight's data.

Saudi Arabia's energy minister, Khalid al-Falih, said on Thursday that oil shipments through the passage won't resume until the area is safe again. War-torn Yemen, the site of Saudi Arabia's years-long proxy-war with Iran, is situated in a vital route for oil commerce. Shipments from the area supply the petroleum needs of Europe, the United States, Egypt and Jordan.

An estimated 4.8 million barrels of crude oil and refined products transited the strait daily in 2016 according to the U.S. Energy Information Administration. Parcels that move through the Suez Canal and Sumed Pipeline would be hit the hardest by an extended halt to shipments.

While we've noted that Saudi Arabia's inventories are currently 1.5% higher year-over-year, total OPEC stockpiles have grown at a stronger pace. Our analysis shows OPEC is holding 323 million barrels in storage, a 4% climb from this time last year.

Orbital Insight monitors more than 25,000 floating roof tanks around the globe – that's the equivalent of more than 5 billion barrels of oil. With our daily coverage, we can provide the quickest understanding to the ways that geopolitical tensions translate into physical impacts on the global oil market.

We'll continue to follow this story closely to gain astute understandings of the impacts of oil route closures. Please reach out to us at for more information on how to gain access to our data.