Oil Prices Plummet on Iran Conflict and Saudi Supply Disruptions
Oil prices plummeted to an 11-day low on Monday as investors weighed diplomatic progress on the Iran conflict and a partial recovery in Saudi crude shipments. Both Brent crude and U.S. West Texas Intermediate fell to their lowest points since September 10, approaching $100 a barrel.
The decline comes amid a broader conflict that began in late February when U.S. and Israeli strikes on Iran triggered a war that has disrupted global energy flows. The blockade of the Strait of Hormuz by Iran has severely restricted Gulf shipments, with sour crude exports from the Middle East Gulf averaging 5.88 million barrels per day in the second quarter, a 65% year-over-year decline.
Saudi Arabia has been forced to adapt, shifting most of its crude loadings to the Red Sea port of Yanbu via the 750-mile East-West pipeline. However, the pipeline was shut down late last week following drone attacks launched from Iraqi territory near the Iranian border. Riyadh then pivoted back to Hormuz and offered ship-to-ship transfers near Oman's Sohar port for Asian refiners.