Saudi Oil Disruptions Send Global Prices Soaring Again

Oil prices rose on Tuesday after attacks on Saudi Arabian energy infrastructure left the kingdom's East-West Pipeline offline, raising concerns about supply disruptions. The pipeline, which allows oil exports to bypass the blockaded Strait of Hormuz, has been disrupted since Friday's attacks, blamed on Iranian-backed fighters in Iraq.

The Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, targeting a military air base in Khamis Mushait. This escalation has intensified concerns about oil supplies, with Brent crude futures rising 21 cents to $105.89 a barrel and U.S. West Texas Intermediate futures up 90 cents at $102.29 a barrel.

According to Goldman Sachs, the recent attack may be more severe and could threaten the remaining 2mb/d of Yanbu exports, with repair assessments ranging from 'very soon' to eight weeks. This has increased the probability of Brent rising above $120 a barrel, as average Gulf oil output in 2027 remains 4 million barrels per day below pre-war levels.

Hamad Hussain, senior climate and commodities economist at Capital Economics, said that fresh attacks by the Houthis may be influencing oil market investors' expectations about the severity and duration of the conflict. He also noted that several weeks of the East-West Pipeline being closed could lift Brent crude prices towards $130 per barrel in the absence of an adjustment in demand or greater oil flows through the Strait of Hormuz.