Oil Prices Tumble as Saudi Pipeline Disruption Exposes Market Weakness
The ongoing conflict in Iran has been ongoing for seven months and is starting to take its toll on oil markets.
The buffers that cushioned the market early on have largely disappeared, with the oversupply from earlier this year depleted and strategic inventories running low.
In May and June, China slashed its crude oil imports by 4-5 million barrels per day (bpd), removing a key demand-side balancing mechanism and keeping prices from spiking to record highs.
The latest blow came when drone attacks disabled the East-West pipeline in Saudi Arabia, which had allowed the Kingdom to bypass the Strait of Hormuz and export oil through the Red Sea port of Yanbu.
This put at risk 4 million bpd of Saudi crude oil shipments from Yanbu, with customers in Asia scrambling for updates.