Saudi Pipeline Shutdown Sparks Crude Price Surge, Global Supply Concerns
A major pipeline shutdown in Saudi Arabia sent crude oil prices surging on Thursday. The East-West Pipeline, which connects eastern oil fields to the Red Sea port of Yanbu, was shut down as a precautionary measure due to regional tensions. The pipeline has a maximum transport capacity of 7 million barrels per day, with roughly 5 million earmarked for export.
Crude futures in New York climbed to the upper $104 range after news of the shutdown broke, but ultimately settled 1.3% higher at $101.39 per barrel. Brent crude also saw a brief spike above $108 before closing up 1.0% at $105.68.
Views are divided on when the pipeline will be restored to service, with US Energy Secretary Chris Wright indicating it would resume operations 'soon.' However, regional officials suggest it could take several weeks.
The shutdown is a concern for global crude supply, particularly as inventories at the port of Yanbu cover only 5-7 days of exports. Saudi Arabia is reportedly moving to increase crude exports via the Strait of Hormuz to offset the impact of the pipeline shutdown.