Saudi Pipeline Outage Sends Oil Prices Soaring Amid Gulf Tensions
Oil prices surged on Tuesday as concerns over supply disruptions persisted following attacks on Saudi Arabian energy infrastructure. The kingdom's East-West pipeline is offline, and there are doubts about efforts to ease shipping risks in the Gulf.
The Brent crude futures rose $1.37 or 1.3% to $107.05 a barrel at 0406 GMT, while U.S. West Texas Intermediate futures were up $1.53 or 1.51% at $102.92 a barrel. Both benchmarks rose more than 1% in the previous session.
The Iran-backed Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, fuelling concerns that the Middle East conflict could widen and disrupt global oil supplies. The Houthis carried out a missile and drone attack on the Khamis Mushait military airbase in southern Saudi Arabia, hitting aircraft hangars, radar systems, runways, and ammunition depots.
Saudi Arabia could begin to exhaust oil available for export within days unless it restores operations on the East-West pipeline, potentially removing as much as 4% of global oil supply from the market. The world's biggest exporter has used the pipeline to reroute around 4 million barrels per day, around 4% of global supply, to the port of Yanbu on the Red Sea.
According to Tim Waterer, chief market analyst at KCM Trade, 'oil traders are treating every fresh attack or infrastructure hit as incremental supply risk, while staying highly sensitive to any sign that the East-West pipeline or Hormuz flows could normalise.'