Saudi Pipeline Closure Sends Oil Prices Soaring
The global oil market is experiencing supply chain disruptions after Saudi Arabia shut down its east-west pipeline in response to drone attacks. The pipeline, which connects the Gulf to the Red Sea, was a crucial route for oil exports and had been moving several million barrels each day.
According to Richard Hunter, head of markets at Interactive Investor, 'This development also suggests that the conflict is as far away from resolution as ever and the inflationary impacts of elevated oil products are starting to become keenly felt.'
The price of a barrel of Brent crude oil rose by around 3% to $108 (£80) on Monday morning. UK natural gas prices were rising by around 5% to 209p per therm, which is a unit of heat energy, the highest level since December 2022.
The International Energy Agency (IEA) reported that Saudi oil exports through the Red Sea port at the pipeline's end had more than doubled since the Iran war began. The IEA also predicted a 2.5 million barrel-a-day drop in worldwide oil consumption by 2026 due to supply disruption.