Saudi Pipeline Shutdown Sends Oil Prices Soaring

Saudi Arabia's East-West pipeline shutdown has sent oil prices surging as it tightens supply and keeps ICE Brent near recent resistance around $110/bbl. According to ING analysts Warren Patterson and Ewa Manthey, persistent uncertainty over damage and outage duration is supporting prices in the near term.

The analysts highlight that Saudi storage at Yanbu offers temporary relief, but risks of port stocks depleting before flows resume remain a concern. The shutdown has sparked fears that the pipeline could be offline for several weeks, with some reports suggesting that the Saudis may look to increase exports via the Strait of Hormuz.

The disruption in the Strait of Hormuz has already led to increased tensions, and despite Trump's announcement that Russia and Ukraine agreed to halt hitting each other's energy infrastructure, there has been little relief in middle distillate cracks. As a result, oil prices are likely to remain well supported until clarity is provided on the extent of damage and the duration of the outage.