Middle East Pipeline Disruptions Send WTI Crude Prices Soaring
Saudi Arabia has reportedly canceled several September crude deliveries to European customers following drone attacks that forced an emergency closure of its East-West pipeline. This pipeline is a vital alternative shipping route to bypass the Strait of Hormuz.
The Houthi militants, backed by Iran, have renewed their attacks in the region, and there is still no clear timeline for reopening the strategic pipeline. As a result, oil supply constraints are extending into North Africa, where Libya's national oil company has suspended operations across two major oilfields and a pumping station due to local protests.
The ongoing vulnerability of key supply assets in these regions is seen as a key factor keeping a firm risk premium embedded in crude and refined product prices. TD Securities warns that 'upside risks across crude oil and products remain extremely elevated amid energy infrastructure attacks in the Middle East and Russia.'