Saudi, Turkey and Pakistan set military talks after Houthi strikes

The three ministers who met on the sidelines of the U.N. General Assembly in New York on Thursday agreed to send their chiefs of staff into talks "to discuss ways to support Saudi Arabia" under a pact that treats an attack on one as an attack on all. Saudi Foreign Minister Prince Faisal bin Farhan, Turkish Foreign Minister Hakan Fidan and Pakistani Deputy Prime Minister Ishaq Dar set no date and committed no troops.

They condemned strikes on Mecca and other civilian sites, commended the Saudi armed forces, and restated the kingdom's right to defend itself under Article 51 of the U.N. Charter. They did not decide an intervention. The next meeting is still a meeting.

The pact's clause, without the troops

Crown Prince Mohammed bin Salman, President Recep Tayyip Erdogan and Prime Minister Shehbaz Sharif signed the agreement in Mecca on August 7. Turkey's communications directorate said it was meant to strengthen collective deterrence and that "any armed attack against any one of the three States shall be regarded as an attack against them all." It also called for deeper defence cooperation. It did not spell out an automatic troop deployment or a required military response.

The foreign ministers, defence ministers and chiefs of staff of the three countries already met in Istanbul on August 31, in the Strategic Political and Defence Committee set up under the agreement. They established a secretariat to be based in Saudi Arabia, initially under a Pakistani secretary-general. Thursday's New York session reviewed progress on that secretariat, the committees and the working groups. The ministers also agreed to an urgent chiefs-of-staff meeting to discuss supporting Saudi Arabia after Houthi attacks.

As recently as mid-September, officials in Ankara and Islamabad said they had not received a Saudi request for help under the pact. The New York talks are how such a request would begin.

Yanbu is still not loading

The military question sits on top of an export problem that was already there. The Strait of Hormuz remains closed in the U.S.-Iran war, which is why Saudi Arabia had been pushing crude west across the peninsula to Yanbu on the Red Sea. Energy-data firm Kpler put East-West Pipeline throughput at about 5.5 million barrels a day before a September 10 attack on its pumping stations, including about 4.5 million barrels a day leaving Yanbu.

The line was shut on September 11 after drone attacks that Riyadh blamed on Iraqi militia. Loadings at the port stopped. The chiefs are being asked to discuss support against the Houthis; the barrels stopped moving after an attack the kingdom attributed to a different force. Houthi claims of a further strike on Yanbu on September 19 hit a hub that had already gone dark.

Sources said the pipeline restarted on September 22. As of Thursday, tanker loadings had not resumed, according to industry sources, satellite imagery and shipping data. Three sources familiar with the restart said it may take six weeks or more for the system to return to full capacity. Another said Aramco has told European refiners it is still building a "critical mass" of crude at Yanbu before it resumes deliveries. Kpler showed about six tankers due to load from September 24 to September 27; two ships scheduled for September 23 did not load. Kpler has also said Aramco is bypassing damaged sections, with full repairs estimated at four to six weeks.

Quoted war-risk premiums for Saudi-linked tankers calling at Yanbu have risen to around 3% of a vessel's value, four industry sources said, from under 1% in early July. Pankaj Khanna, chief executive of shipping group Heidmar Maritime Holdings, said the Red Sea is the harder passage: "It's easier to do the Strait of Hormuz right now ... because at least in the Strait of Hormuz, the US is providing some cover. In the Red Sea, there's nothing." He said any tanker docking at Yanbu will have a Saudi connection and hence be at risk. Heidmar is avoiding Saudi ports while remaining active in both waterways.

The Saudi-led coalition said it shot down six Houthi ballistic missiles aimed at Taif and Yanbu on Thursday. The Houthis said they had hit a "sensitive target" in Riyadh and Aramco facilities in Yanbu with missiles and drones. Those are competing accounts. Neither side has established fresh damage to export capacity from that day's claimed strikes.

Brent settles higher as Yanbu stays dark

Brent crude settled at $106.60 a barrel on Thursday, up $3.52, or 3.4%. West Texas Intermediate settled at $94.61, up $2.45, or 2.7%. WTI had been at $96.35 in the morning, up 4.5%, before those gains faded as reports circulated of U.S.-Iran contacts on reopening Hormuz. From Friday's close through Thursday, WTI was still down 5.7%. Brent was up 2.6%.

Overnight Brent futures were at $105.34 as of 1:41 a.m. Eastern Friday, down 1.2%, with WTI futures at $92.78, down 1.9%. Yanbu is still not loading, and Hormuz is still shut.

Saudi stocks did not trade as a leveraged claim on those barrels. The iShares MSCI Saudi Arabia ETF CKSA, graded C in etf.net's emerging-market single-country category, fell 0.81% on Thursday to $36.89 and is down 6.0% over the past month. Banks are 42% of the fund. Saudi Aramco is 11%. Energy as a sector is 12%. That is a domestic equity book with an oil company in it, not a tanker waiting off Yanbu.

The funds that hold the crude are futures packages. The United States Oil Fund BUSO, graded B among energy-futures funds, rose 2.86% on Thursday. It is built on near-dated WTI contracts. The United States Brent Oil Fund CBNO, graded C, rose 2.45%.

Oil contracts moved. The Saudi equity fund did not. That split is the holder map.

Pezeshkian puts space between Tehran and the Houthis

The three chiefs of staff have not said when they will meet, what "support" would look like, or whether it would be air defence, intelligence, industry, or something that puts Turkish or Pakistani forces in the line of fire.

Iranian President Masoud Pezeshkian, speaking on American television the same day, said "the Houthis are responsible for their own actions." Tehran is trying to put space between itself and the missiles.