WTI Crude Surges to $102 as Supply-Side Concerns Mount
International oil prices continued their upward trend on Tuesday, with WTI crude reaching $102.35 during the session. This surge in prices is largely driven by supply-side concerns, including disruptions to key energy infrastructure and shipping routes.
The Saudi East-West Pipeline remains offline following a drone attack, with no clear timeline for its resumption. Analysts estimate that the pipeline could handle around 4 million barrels per day, or about 4% of global supply. This has added to concerns over Saudi Arabia's export capacity and the global crude-oil market's ability to buffer against risks to shipping through the Strait of Hormuz.
Meanwhile, regional talks on shipping arrangements in the Strait of Hormuz have been postponed, further prolonging elevated risk premiums in the crude oil market. This uncertainty has contributed to higher transportation costs and risk premiums, which are reflected in spot-premium differentials and futures risk premia.