Bitcoin breaks above US$80,000 as Saudi oil supplies to Europe reportedly halted — but oil futures still close lower

Bitcoin briefly broke above US$80,000 on September 18, while Saudi Aramco reportedly told European refiners it would stop supplying them from October. The three major US stock indexes also moved only modestly. The three markets were in focus on the same day, but moved in different directions: Bitcoin rose about 6% intraday, Brent crude ended 0.9% lower at US$103.87 a barrel, and the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all moved by less than 0.4%. A common backdrop was the Federal Reserve’s first rate hike since 2023, the US 10-year Treasury yield rising above 5% again, and concerns that higher oil prices would fuel inflation.

Bitcoin: short squeeze, rather than a long liquidation

According to Yahoo Finance data, Bitcoin started the day at about US$76,350 and was trading at around US$81,190 at 4pm Eastern time, up roughly 6.3%. Cailian Press said this was the first time Bitcoin had returned above US$80,000 since September 7. A short squeeze provided part of the momentum, with liquidations mainly involving short positions rather than longs being wiped out: CoinGlass data showed about US$218 million in short positions were liquidated across the market over 24 hours, while another set of figures cited by Yahoo Finance put the figure at more than US$445 million. Cailian Press, citing CoinGlass, also reported that more than 100,000 people globally had been liquidated over the previous 24 hours.

Before that, the US Senate held a procedural vote on the cryptocurrency market structure bill, the CLARITY Act, on Tuesday, September 15. The vote was tied at 50-50, falling short of the 60-vote threshold, and Bitcoin briefly fell below US$75,000. After the Fed raised interest rates on Wednesday, crypto information platform KuCoin linked the rebound to guidance on the interest-rate path that was milder than expected. China International Capital Corporation, however, said the Fed’s overall tone was more hawkish than the market had anticipated. Bitcoin remained about 36% below its 52-week high of roughly US$126,200.

Crude oil: supply disruption reported, but futures prices fall

According to CNBC, Iran began attacking tankers in the Strait of Hormuz after the US and Israel struck Iran in late February this year. Saudi Arabia consequently became more reliant on its East-West pipeline, which links oilfields in the east to the Red Sea port of Yanbu and has a designed capacity of 7 million barrels a day. Bloomberg reported that Saudi Arabia told OPEC its August production had fallen by 1.9 million barrels from July to about 6.24 million barrels a day, the lowest level since 1990. The pipeline was shut down on September 10 after a drone attack launched from Iraq, with Reuters reporting that three pumping stations were damaged.

Reuters, citing industry sources on Tuesday, reported that Saudi Arabia had suspended Yanbu exports and cancelled some vessels bound for European customers. Aramco declined to comment. Bloomberg reported on Friday that Aramco had told at least two European refiners that their October supply would be zero. Sources said the arrangement applied to all European customers with long-term contracts, while Aramco had yet to issue a public response. Bloomberg also reported that Aramco was seeking to restore about half of the pipeline’s flow within days and return it to full operation within six weeks. Poland’s Orlen was among the affected customers. According to Bloomberg, it had bought an additional 16 cargoes of crude from Norway, Britain and elsewhere to cover the shortfall through November.

Brent crude briefly reached about US$108 a barrel at the start of the week, which Reuters described as roughly a four-month high, before falling for several consecutive days to close at US$103.87 on Friday, down 0.9%. WTI settled at US$100.30, down 1.6%, and was flat for the week, according to CNBC. Reuters attributed Thursday’s decline to reports that Saudi Arabia was offering Asian refiners more supplies transferred ship-to-ship off Oman’s Sohar port. JPMorgan estimated that Saudi crude shipments through the Strait of Hormuz had averaged about 2.8 million barrels a day over the previous six days, compared with only about 700,000 barrels a day in August.

Europe, however, was on the other side of these mitigation measures, with the physical market noticeably tighter. Saxo Bank said spot Dated Brent rose above US$130 a barrel, while Invezz reported that North Sea Forties crude had at one point reached US$136.75, well above the futures price. Rapidan Energy forecast that Saudi oil exports would fall by about 400,000 barrels a day this month as a result, and said the pipeline outage would constrain Saudi production and exports at least until the end of September. US Energy Secretary Chris Wright told CNBC that the disruption was temporary and could be resolved within days.

US stocks: rate hike and yields outweigh oil prices

There was no panic in US equities that day. At the close, the Dow fell 95.40 points, or 0.18%, to 51,682.64; the S&P 500 rose 0.17% to 7,650.50; and the Nasdaq gained 0.39% to 26,522.55. The US 10-year Treasury yield rose above 5% at one point during the week, its highest level since July 2007, and stood at about 5.006% on Friday. Bloomberg said investors were betting that oil prices approaching US$100 would push up inflation, forcing the Fed to continue raising interest rates. For the week, the Dow fell more than 1.5%, the S&P 500 edged lower, while the Nasdaq finished higher.

Among individual stocks, Netflix (Nasdaq: NFLX) was dragged down after Wells Fargo downgraded it to “underweight” and cut its price target to US$57. The shares fell about 5% at the open.

Three things to watch next

• Pipeline recovery and the spot premium: Watch whether the gap between spot and futures prices narrows, with Dated Brent above US$130 and futures at about US$104. Weekly inventory data from the US Energy Information Administration and OPEC’s monthly report will also be worth monitoring.
• Whether Bitcoin can hold US$80,000: Watch weekend trading, daily flows into spot Bitcoin ETFs and leverage levels in the derivatives market.
• Yields and corporate guidance: Monitor whether the 10-year US Treasury yield can remain below 5%, as well as what companies say about costs and demand once the US third-quarter earnings season begins.