Saudi Arabia and Libya Crude Supply Disruptions Send Oil Prices Soaring

Crude oil prices surged on Tuesday, hitting a four-month high due to deepening supply concerns in major oil-producing countries. The Brent crude price rose $3.07 or 2.9% to $108.75 per barrel, while US West Texas Intermediate (WTI) skyrocketed by $4.44 or 4.38% to $105.83 per barrel.

The supply disruptions are centered in Saudi Arabia and Libya. Aramco, the state oil company of Saudi Arabia, has cancelled or delayed crude deliveries to European refiners due to the shutdown of its East-West pipeline, which was attacked on September 10. The pipeline is a critical route for transporting oil around the Strait of Hormuz.

The shutdown has led to a significant increase in commodity vessel traffic through the Strait of Hormuz dropping to four vessels on Monday from 10 the previous day, according to preliminary data from Kpler. Saudi Arabia could exhaust its available crude for export within days unless the East-West pipeline resumes operations, which would threaten up to 4% of global oil supply.

In Libya, the National Oil Corporation (NOC) announced that operations at three oil fields have been suspended due to protesting members of the Petroleum Facilities Guard shutting a valve on the Hamada-Zawiya crude export pipeline. The NOC warned that it may declare force majeure if the valve remains closed or additional fields are forced to halt production.