Saudi Disruptions Fuel Oil Price Surge Amid Global Supply Worries
Oil prices surged more than 2% on September 14 after Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf exacerbated supply concerns. The East-West oil pipeline, which helps reroute Saudi exports avoiding the Strait of Hormuz, was shut down by a drone strike that originated in Iraq on September 11.
The loss of this pipeline threatens up to 4% of global oil supply, making it a significant concern for the market. Brent crude futures rose $2.90, or 2.77%, to $107.51 per barrel, while West Texas Intermediate futures rose $2.27, or 2.27%, to $102.32 per barrel.
Saudi Arabian state media released video footage of damage to homes and a mosque from what it said was a Houthi attack on the country's southern Jazan province. The Houthis also struck a Saudi military base in a neighboring province, while an Iranian commercial vessel was hit off its coast, killing one person and wounding four crew members.
IG market analyst Tony Sycamore warned that unless this week's talks in Oman produce something operational or the East-West pipeline is brought back online quickly, crude oil may continue to extend its gains toward $119.48, a high reached in early March.