East-West Pipeline Shutdown Sparks Oil Price Surge
The East-West oil pipeline in Saudi Arabia has been shut down after a drone attack, sparking concerns of an energy crisis. The pipeline, which transports crude oil from the Persian Gulf to the Red Sea, is crucial for Saudi Arabia's exports and accounts for up to 4% of global supply.
The shutdown comes as tensions between the US and Iran remain high over control of the Strait of Hormuz, a critical maritime route for energy transport. The disruption has sent oil prices soaring, with Brent crude reaching $109 per barrel, a rise of over 3% in just a few hours.
Federpetroli has warned that prices could reach as high as $120, while Goldman Sachs estimates that the rising energy costs will weigh on growth in the coming months. The bank predicts inflation in Europe could reach 3.6% by year-end and GDP will slow down in late 2026 and early 2027.
The US investment bank believes the European economy has been more resilient than expected, but warns of a slowdown in Spain and Italy, particularly due to high gas consumption. Germany is also expected to experience a temporary weakening of growth during the winter months.