Oil Prices Surge as Disruptions to Shipping Routes Intensify
Oil prices surged on Monday due to disruptions affecting key shipping routes. The price of Brent crude futures gained $2.90, or 2.77 per cent, to $107.51 per barrel by 2313 GMT, while US West Texas Intermediate (WTI) futures advanced $2.27, or 2.27 per cent, to $102.32 a barrel.
The latest increase came after crude prices had already risen 8 per cent over the previous week, pushing oil above $100 a barrel for the first time since July. The disruptions centre on developments involving Saudi Arabia's oil infrastructure and strategic shipping routes connecting the Middle East with international markets.
The shutdown of Saudi Arabia's East-West oil pipeline after a drone strike originating in Iraq has put up to 4 per cent of global oil supply at risk. The pipeline enables the world's largest oil exporter to redirect crude shipments without using the Strait of Hormuz, which is also under pressure due to attacks on vessels and developments involving the Iran-aligned Houthis.
Tony Sycamore, an analyst at IG, said the outlook would depend on whether talks in Oman produced an operational outcome or the East-West pipeline was brought back online quickly. According to Sycamore, without either development, crude prices could continue moving towards the $119.48 level reached in early March.