Brent Crude Surges Above $107 as Saudi Pipeline Shutdown Adds Supply Risk

The price of Brent crude oil has climbed above $107 per barrel after Saudi Arabia's East-West Pipeline was shut down following multiple attacks, leaving traders uncertain about the duration of the disruption.

The pipeline, operated by Saudi Aramco, carries around 4-5 million barrels a day and accounts for 4-5% of global supply. The shutdown has added to the existing supply risk in the market, with Brent prices already affected by other disruptions, including the closure of the Strait of Hormuz.

The exact extent of the damage to the pipeline is not clear, and Saudi Arabia's energy ministry has released no information on a restart date or a damage assessment. Analysts are working without key data, which can make it difficult to price the disruption accurately.

While a quick restart could remove some of the premium from Brent prices, a prolonged closure would lead to sustained higher levels in the market. The key factor is not the pipeline's maximum capacity but its current throughput and whether exports are affected. Saudi Arabia's export volumes will be crucial in determining the impact on global oil markets.