Saudi Pipeline Closure Sends Global Oil Prices Soaring Again
Global oil prices surged to their highest level since May after Saudi Arabia shut down its key East-West pipeline, exacerbating an already dire shortage of crude supply worldwide.
The pipeline, which carries up to 7 million barrels of oil per day, was closed as a precautionary measure following an attack blamed on an Iran-aligned militia in Iraq.
According to Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, the closure will push gasoline prices higher over the coming days as the latest spike in oil costs filters its way through to the pump.
The average price of a gallon of gas in the U.S. currently stands at $4.31, up about $1.30 from pre-war levels, and could rise by 25-50 cents as a result of the pipeline closure, Krishnamoorti said.
However, Tom Seng, a professor of energy finance at Texas Christian University, cautioned that the disruption has already been factored into gasoline prices, meaning an additional supply shock would be necessary to substantially increase prices at the pump.