Saudi Pipeline Closure Threatens Global Oil Flows

Saudi Arabia's closure of the East-West pipeline has raised concerns about global energy markets in crisis due to the war with Iran. The 1,200 km-long pipeline is crucial for getting oil out of the Middle East by shipping it to the Red Sea instead of through the Strait of Hormuz.

The pipeline was closed after an attack blamed on drones from Iranian-backed militias in Iraq. Repairs are expected to take three to five weeks, with 2.6-4 million barrels of oil per day at risk of 'disappearing from the market'. This is about 4% of the global oil supply.

Brent crude prices have already responded to this significant loss of supply, trading above $105 a barrel. The US and Israel's attack on Iran in February had disrupted shipping through Hormuz, but some tanker traffic has resumed. However, Yemen's Houthi rebels have seized islands along key Red Sea shipping routes, further threatening Saudi exports.

Analysts warn that more supply shocks and higher prices could pile up, straining households worldwide. Countries in Asia and Africa rely heavily on imports from the Middle East, with Nigeria seeing diesel prices 92% higher than in late February and Indonesia experiencing a 87% increase in diesel prices.