Saudi Pipeline Attacks Send Brent Crude Price Soaring Above $107

The Brent crude oil price has surged to around $107 per barrel after attacks on Saudi Arabia's East-West pipeline, which is expected to remain out of service for three to five weeks.

The pipeline, which has a capacity of up to 7 million barrels per day, was hit by drone strikes from Iraq, causing visible structural damage. The shutdown will trap up to 4% of global oil supply, adding to the already constrained physical crude availability.

Saudi Arabia's production had plummeted to 6.2 million bpd in August, making the loss of export pipelines critical. The East-West pipeline served as Saudi Arabia's only remaining high-volume, overland route to get oil to global buyers due to Iran's restrictions on shipping through the Strait of Hormuz.

The attacks have compounded regional tensions and diplomatic hopes for a breakthrough on governance of shipping lanes have been broken. Energy analysts warn that sustained high prices could force central banks to hold interest rates higher for longer to combat structural energy inflation.