Saudi Pipeline Disruption Sends Oil Prices Soaring to $107 a Barrel

Oil prices surged on Tuesday as tensions over Saudi Arabia's energy infrastructure intensified. The East-West pipeline, a key route for oil exports, was disrupted after attacks by Iran-backed Houthi forces in Yemen.

The pipeline, which allows Saudi Arabia to bypass the blockaded Strait of Hormuz when exporting oil, has been offline since the recent attacks. This has raised concerns over possible supply disruptions and increased shipping risks in the Gulf.

Goldman Sachs warns that oil prices could hit $120 a barrel if these tensions prolong. The bank estimates that each additional month of disruption could add around $7 to $8 a barrel to Brent prices, with average monthly Brent prices reaching $114 a barrel if the disruption continues for three months.

Citi has raised its average Brent crude price forecast for the third quarter to $86 a barrel from $80, citing a longer-than-expected timeline for the reopening of the Strait of Hormuz. ANZ analysts have also lifted their short-term Brent forecast to $95 a barrel and warned that prices could rise further if the Middle East conflict escalates.