Houthi Attack on Saudi Pipeline Sparks Oil Market Jitters
The oil market is bracing for further disruption as reports emerge of an attack on Saudi Arabia's East-West oil pipeline, which could severely impact global supply.
The pipeline, designed to bypass the Strait of Hormuz chokepoint, has become increasingly vital as tanker traffic through the strait continues to dwindle. With Houthi forces targeting the pipeline and satellite data indicating fires at six locations along the route, the market is left wondering if the pipeline itself has suffered significant damage.
The East-West system carries crude from Saudi Arabia's eastern producing region across the country to the Red Sea, allowing the kingdom to export oil without passing through the Strait of Hormuz. With Houthi forces gaining influence in the Bab el Mandeb Strait and refined product inventories deteriorating, the market is facing a perfect storm of supply disruptions.
HSBC has raised its average Brent forecast for 2026 to $90/bbl from $80/bbl, citing continued disruption to tanker traffic through Hormuz and a tighter global balance lasting through the end of the year. The estimate assumes Hormuz flows are running at approximately 30% of their pre-conflict level.