Saudi Pipeline Shutdown Sends Oil and Gas Prices Soaring

Oil and gas prices have surged in response to Saudi Arabia's decision to shut down its east-west pipeline following a series of drone attacks. The pipeline, which has been a crucial route for oil exports since the Iran war disrupted shipping in the Strait of Hormuz, was forced offline over the weekend.

The price of Brent crude oil climbed by 3% to $108 per barrel on Monday morning, while UK natural gas prices rose by around 5% to 209p per therm, their highest level since December 2022. The Saudi foreign ministry blamed the attacks on drones originating from Iraq, which its government has pledged to investigate.

Richard Hunter, head of markets at Interactive Investor, noted that the east-west pipeline's shutdown will further constrain oil supply. He also highlighted the ongoing conflict in the Middle East and its inflationary impacts, citing the August Consumer Prices Index report, which showed gasoline prices increased by 3.9% over the month.