Saudi Pipeline Restart Plans Weaken Oil Prices Amid Disruption Risk
WTI oil is retreating as traders focus on news from Saudi Arabia. The country plans to restart about half of the damaged East-West pipeline's capacity in the next few days, following a drone attack that halted its operations. Reports also indicate that Saudi Arabia aims to restore full capacity within six weeks.
The market views this development as a negative catalyst for prices, despite an anticipated increase in global deficit until the pipeline returns to full capacity. Furthermore, there is a significant risk of another attack, given the previous incident's alleged involvement by pro-Iran militia in Iraq and ongoing attacks from Houthis backed by Iran.
Oil prices may also react to the recent Fed Interest Rate Decision, where the federal funds rate was raised by 25 bps as expected. The move has led to a stronger U.S. dollar against a broad basket of currencies, potentially putting additional pressure on commodities in the short term.
Currently, WTI oil is attempting to settle below the $102.00 level, which could lead to further declines towards the psychologically significant $100.00 mark and potentially test support levels around $97.50-$98.00 if broken.