Saudi Pipeline Closure Threatens Oil Price Spike

The closure of the East-West Pipeline in Saudi Arabia has raised concerns about oil prices, which could reach $150 per barrel due to supply shortages. The pipeline, which connects Saudi oil fields with its Red Sea ports, was attacked by Yemen's Houthi rebels and is currently under repair. This adds to the existing supply shortage from the Persian Gulf, exacerbated by the war in Iran and the blockade of the Strait of Hormuz.

The East-West Pipeline had been operating at full capacity, transporting 7 million barrels of crude oil per day. Its closure has caused a significant increase in Brent prices, which are now hovering around $110 per barrel. Analysts predict that if the pipeline is not repaired soon, oil prices could reach $120-130 per barrel.

Martha Tallas, director of consulting and analysis at Argus, believes that even if the East-West Pipeline is repaired, there will still be an added layer of pricing on crude to cover geopolitical risk. Jorge León, head of analysis at Rystad, warns that $150 per barrel is a limit beyond which prices could no longer rise due to destroyed demand.