Brent Crude Rises to $106.97 Amid Pipeline Shutdown and Shipping Constraints

Brent crude oil has risen to $106.97 per barrel, up 2.55% from Monday's opening price of $107.11 and extending a rally that has added about 9% over the past week.

The reason for this increase is physical, not financial: a major regional export pipeline, which normally carries around 7 million barrels per day, remains shut due to precautionary measures and no restart timeline is in sight.

This disruption has caused shipping through the region's main chokepoint to be further constrained, leading to a widening of the forward curve. The front-month spread has increased to $5.53 backwardation from $3.84 just a week ago, meaning that the market is currently paying more for barrels delivered today than for those delivered later.

The analyst commentary suggests that the impact of the pipeline shutdown depends on its duration: a quick restart could be mitigated by inventory levels at the export terminal, but a prolonged closure may force production cuts. Additionally, a meeting to discuss a temporary shipping corridor through the strait has been postponed, removing the near-term diplomatic path back to normal flows.