War in West Asia Sends Global Oil Prices Soaring
The ongoing war in West Asia has taken a toll on global oil supplies. The closure of the Strait of Hormuz since February 28 and a drone attack on the East-West pipeline on September 10 have sent Brent crude oil prices soaring to $109.4 per barrel, now at $104.2.
The disruption could intensify following the signing of the Lindsey O Graham Sanctioning Russia and Iran Act by President Trump. He stated that Iran has a choice between annihilation or a deal after the US Congressional elections. Within seven days, Iran conveyed its preference for a deal.
Saudi Arabia can still export 4 million barrels of crude oil through the East-West pipeline, while the UAE exported 1.5 million barrels through the Habshan-Fujairah pipeline. This allows both countries to partially circumvent Hormuz, operating shuttle services to bring their oil outside for onward transportation.
The closure of the East-West pipeline could result in a minimum disruption of 13-14 million barrels per day of crude oil supply, affecting not just targeted countries but also global markets.