Saudi Pipeline Closure Sends Crude Prices Soaring Amid Global Supply Fears
Crude oil prices have rallied to their highest level in three and a half months due to concerns over global supply constraints. The October WTI crude oil contract (CLV26) closed up 1.34% on Monday, while the October RBOB gasoline contract (RBV26) rose 0.30%. Saudi Arabia's decision to shut down its East-West pipeline following attacks by Houthi rebels has disrupted a key route that bypasses the Strait of Hormuz and has sent crude prices soaring.
The pipeline, which carries 7 million barrels per day of crude oil, was closed as a precaution after the attacks. The move is expected to tighten global oil supplies further, with Vitol Group estimating a loss of around 2 million barrels per day in crude exports from the Middle East due to the closure.
The Houthi rebels have also targeted energy facilities in Saudi Arabia, forcing several oil facilities to halt production. Saudi Arabia's August crude production fell to 6.238 million barrels per day, its lowest level since 1990.