Saudi Pipeline Outage Pushes Oil Prices Near $110
The ongoing supply risks in the Middle East have pushed international oil prices to high levels. During Tuesday's Asian trading session, Brent crude futures (UKOIL-F) rose to near $107 per barrel, while WTI crude futures (USOIL-F) advanced to around $103. Saudi Arabia's East-West Pipeline has been shut down following an attack, and repairing the damaged facilities could take three to five weeks.
The pipeline connects the eastern oil-producing regions of Saudi Arabia to the port of Yanbu on the Red Sea coast and serves as a vital route for exporting crude oil while bypassing the Strait of Hormuz. Prior to the attack, Saudi Arabia transported approximately 4 million barrels of crude oil per day through the pipeline, representing about 4% of global supply.
The issue is that the Strait of Hormuz itself remains under heightened tension. Reports indicate that with alternative export capacity constrained, Saudi Arabia is attempting to increase the volume of crude oil shipped through the Strait of Hormuz. However, shipping companies face higher insurance, rerouting, and security costs, and even if crude oil can be exported, transport efficiency is likely to decline.
As long as the East-West Pipeline remains offline, oil prices are unlikely to see a sustained decline based solely on diplomatic statements. The 20-day moving average of Brent crude oil has remained above its 60-day moving average, indicating that the short-to-medium-term bullish structure remains intact.