Oil Prices Soar Above $108 as Saudi Pipeline Remains Offline

Oil prices surged on Tuesday, reaching above $108 per barrel, as attacks on Saudi Arabian energy infrastructure left the kingdom's East-West pipeline offline. The Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, targeting a military airbase in Khamis Mushait.

The damage to the pipeline has raised concerns about oil supplies, with some buyers and traders warning that Saudi Arabia could exhaust its crude available for export within days unless the East-West pipeline resumes operations. The strike threatened up to 4% of global oil supply, according to Goldman Sachs.

Goldman Sachs also warned that the recent attack may be more severe and could threaten the remaining 2 million barrels per day of Yanbu exports. The average Gulf oil output in 2027 could remain 4 million barrels per day below pre-war levels, increasing the probability of Brent rising above $120 a barrel.

Commodity vessel traffic through the Strait of Hormuz dropped to four on Monday, down from 10 a day earlier, raising concerns about a route that carried about a fifth of global oil supplies before the US-Israeli war on Iran kicked off on February 28.