Saudi Pipeline Shutdown Triggers Fresh Energy Crisis

The global energy crisis deepened after Saudi Arabia shut down its major East-West pipeline following attacks, disrupting a key route used to bypass the Strait of Hormuz during the US-Iran conflict. The shutdown comes as tensions between Iran and the US escalate, with Tehran and Washington locked in a struggle over control of the vital maritime chokepoint.

The pipeline, which has a capacity of about 7 million barrels a day, ferries oil across Saudi Arabia to Red Sea ports. The move is seen as a precautionary measure by Riyadh, but its impact on global oil supplies will be significant if operations are not resumed quickly. June Goh, senior oil market analyst at Sparta Commodities SA, noted that 'if flows were to resume quickly, the impact should be limited as inventories at Yanbu, the pipeline's western end, could be tapped.' However, a prolonged shutdown could force output cuts.

The global benchmark Brent rose toward $108 a barrel, while West Texas Intermediate was near $103. European natural gas also gained, surging as much as 3.8%. The drawn-out crisis has delivered an inflationary jolt to the global economy, forcing up prices of crude, natural gas, and petroleum products.