Saudi Pipeline Attack Sends Crude Oil Prices Soaring
Crude oil prices surged over 4% on September 15 after an attack on Saudi Arabia's East-West Pipeline, a key export route.
The pipeline transports crude from eastern oil fields to the Red Sea port of Yanbu and is crucial for bypassing the Strait of Hormuz. The attack has forced its closure, putting around 4% of global crude oil supply at risk.
NYMEX October WTI crude futures rose $4.44 (4.38%) to settle at $105.83 per barrel, while ICE November Brent crude futures rose $3.07 (2.90%) to settle at $108.75 per barrel. The energy sector saw a broad-based rise.
Refined products also strengthened in tandem, with November heating oil rising 25.47 cents (5.36%) and November RBOB gasoline increasing by 10.90 cents (3.47%).
The US Energy Secretary estimates that the pipeline could be back in operation within days, but Goldman Sachs warns that attacks on oil infrastructure signal a significant escalation of the conflict, raising the possibility of Brent crude breaching $120 per barrel.
Market expectations suggest that European refineries will turn to U.S. crude as an alternative source, widening the price spread of WTI relative to Brent.