Saudi Arabia has reportedly started cutting oil production as the escalating conflict in the Middle East saw critical energy infrastructure being targeted by both sides over the weekend.
- While Aramco has redirected some crude shipments to Yanbu on the Red Sea via an alternative pipeline, the route lacks Hormuz’s capacity.
- Israel reportedly struck energy infrastructure in Tehran over the weekend, damaging four oil storage sites and oil production transfer centres.
- The United States Oil Fund (USO) gained 12% in pre-market to its highest levels since October 2018.
Saudi Arabia has reportedly started cutting oil production, following similar actions by the United Arab Emirates, Kuwait, and Iraq, as the conflict in the Middle East shows no sign of a slowdown, leading to surging oil prices.
The Strait of Hormuz, which carries roughly one-fifth of the world’s oil supply, has been shut to maritime traffic after Iran threatened vessels passing through the region. The disruption has caused export bottlenecks, forcing major producers to reduce output as storage tanks begin to fill.
According to a Bloomberg report on Monday, Saudi state oil giant Aramco has redirected some crude shipments to Yanbu on the Red Sea via an alternative pipeline. However, the route lacks enough capacity to replace volumes normally exported through the Strait of Hormuz. Saudi Arabia, the world’s largest oil exporter, produces about 10 million barrels daily and exports roughly seven million barrels.
Conflict Hits Major Energy Infrastructures
Reports indicated that Israel struck energy infrastructure in Tehran over the weekend, damaging four oil storage sites and oil production transfer centres. Meanwhile, Iran’s Islamic Revolutionary Guard Corps (IRGC) was reported to have targeted a commercial tanker in the Gulf with a drone attack as well as a fuel depot in Kuwait.
Last Friday, Qatar’s Energy Minister Saad Sherida al-Kaabi warned the Financial Times that Gulf exporters may have to halt production within days, potentially driving oil prices to $150 per barrel.
JPMorgan Chase & Co. had earlier estimated that Saudi Arabia could run out of oil and fuel storage capacity within a little over two months if the conflict continues. Meanwhile, Goldman Sachs said crude prices could rise by about $15 per barrel if supply disruptions last for a full month.
TPET, BATL, INDO Stocks Continue To Remain In Spotlight
At the time of writing, Brent crude futures for May 2026 deliveries surged 11.6% to $103.4 per barrel, while West Texas Intermediate (WTI) contracts expiring in May 2026 gained around 11% to $97.3 per barrel.
Shares of Trio Petroleum (TPET) surged 20% in pre-market trading, while Battalion Oil (BATL) jumped 11% and Indonesia Energy (INDO) traded 5% higher. The United States Oil Fund (USO) gained 13% to its highest levels since October 2018.
TPET shares are trading near their June 2025 highs after breaking above the 200-day moving average last week. The stock has surged about 190% so far in 2026. Meanwhile, BATL has rallied more than 1,700% this year and recently secured around $15 million in fresh funding from a new investor.
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