Saudi Pipeline Shutdown Sends Oil Prices Soaring

The East-West pipeline in Saudi Arabia, which normally carries around 4 million barrels per day of oil from eastern fields to the Red Sea port of Yanbu, has been shut down due to Houthi strikes. This pipeline is a critical lifeline for global oil trade and its closure is exacerbating existing supply shortages.

The market was already under pressure, with Saudi crude production having fallen to 6.2 million barrels per day in August from 10.9 million in February, and the International Energy Agency projecting a 5.7 million barrel per day drop in global oil supply for the year.

This outage is particularly concerning because it affects the workaround for the Strait of Hormuz, which has been intermittently disrupted for months. Without this pipeline, the world loses its Plan B for oil supply.

The impact is already visible, with Brent crude prices settling at $109.51 a barrel on September 9 and West Texas Intermediate finishing the same session at $97.26, both above $100 a barrel today.