Saudi Pipeline Closure Sends Oil Prices Soaring Towards $108
Oil prices surged on Monday after Saudi Arabia shut down its East-West pipeline due to attacks, removing a crucial route for exporting crude without passing through the Strait of Hormuz. The closure intensified fears of a global supply crunch.
The benchmark Brent oil price rose as much as 3.7 per cent before paring back gains to trade 3.19 per cent higher at $107.95 a barrel at 8.05am UAE time. West Texas Intermediate gained 3.14 per cent to $103.19.
Saudi Arabia's Energy Ministry said it suspended operations on the pipeline as a precaution after 'multiple' attacks in the Riyadh and Madinah regions on Thursday, which caused a number of injuries. The ministry did not give details about any damage the pipeline sustained or when Saudi Arabia plans to resume flow of crude through the pipeline.
The East-West pipeline is critical for linking oil production sites in the Eastern Province with Yanbu on the kingdom's western coast and has allowed Saudi Arabia to continue exporting oil through its Red Sea export hub, bypassing the US-Iran war shipping chaos in the Strait of Hormuz. The pipeline's closure removes a significant outlet for Gulf crude at a time when shipping through the Strait of Hormuz remains severely disrupted.