Saudi Arabia's Oil Exports Plunge as Pipeline Strike Threatens Global Supply
Oil prices surged on Tuesday after shipping industry sources said crude loadings at Saudi Arabia's Red Sea export hub of Yanbu had been suspended, deepening concerns that disruptions to a critical oil-export route could persist for weeks.
Gains in US West Texas Intermediate (WTI) crude futures outpaced Brent, as fears that Saudi Arabia's supply troubles were widening sent investors rushing into US crude as an alternative. WTI closed up $4.44, or 4.38 percent, at $105.83 a barrel, while Brent finished up $3.07, or 2.9 percent, at $108.75.
The suspension of oil loadings at Yanbu came after sources said Riyadh had informed European customers that some late-September crude cargoes would be cancelled. Andy Lipow, president of Lipow Oil Associates, said the cancellation of some Saudi crude shipments to Europe has strengthened expectations that European refiners will turn to US supplies, helping lift WTI relative to Brent.
The East-West Pipeline, which carries oil from the east to Yanbu on the west coast, allowing exports to leave through the Red Sea without tankers passing through the Strait of Hormuz, was forced to shut due to attacks by Yemen's Houthis. The pipeline strike threatens up to 4 percent of global oil supply.