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Brent Crude Surges as Saudi Pipeline Shutdown Fuels Supply Concerns
Confirmed
In Short: Oil prices rose sharply as attacks on Saudi Arabia and Gulf vessels raised concerns about global crude supplies, following the shutdown of a major pipeline.
Brent crude futures surged more than 2% on Monday, reaching $107.51 a barrel, as fresh attacks on Saudi Arabia and Gulf vessels added to supply risks. The East-West oil pipeline in Saudi Arabia, which transports up to 4% of global oil supply, was shut down after a drone strike, according to Saudi officials.
Tony Sycamore, an IG market analyst, noted that prices could move higher if the pipeline remains offline or diplomatic efforts fail. 'Unless this week's talks in Oman produce something operational or the East-West pipeline is brought back online quickly, the risk is that crude oil continues to extend its gains,' Sycamore said.
The attacks, which also targeted a Saudi military base, followed the closure of the East-West pipeline, which allows Saudi Arabia to bypass the Strait of Hormuz. The shutdown threatens to disrupt up to 4% of global oil supply, and the Red Sea port of Yanbu will have to rely on storage that is estimated to cover five to seven days of exports.
Janiv Shah, an oil markets analyst at Rystad, noted that the market still expects Saudi inventories to cushion exports in the near term, but if the disruption extends beyond the current inventory cushion, prices could rise further. PVM analyst John Evans echoed this, stating, 'Short of stopping both oil-price-affecting wars and curing the global refinery (capacity) problem, our fraternity is wondering where an inoculation against $120 Brent can be found.
What's confirmed
- Brent crude futures surged more than 2% on Monday, reaching $107.51 a barrel, as fresh attacks on Saudi Arabia and Gulf vessels added to supply risks. The East-West oil pipeline in Saudi Arabia, which transports up to 4% of global oil supply, was shut down after a drone strike, according to Saudi officials.
- Tony Sycamore, an IG market analyst, noted that prices could move higher if the pipeline remains offline or diplomatic efforts fail. 'Unless this week's talks in Oman produce something operational or the East-West pipeline is brought back online quickly, the risk is that crude oil continues to extend its gains,' Sycamore said.
- The attacks, which also targeted a Saudi military base, followed the closure of the East-West pipeline, which allows Saudi Arabia to bypass the Strait of Hormuz. The shutdown threatens to disrupt up to 4% of global oil supply, and the Red Sea port of Yanbu will have to rely on storage that is estimated to cover five to seven days of exports.
- Janiv Shah, an oil markets analyst at Rystad, noted that the market still expects Saudi inventories to cushion exports in the near term, but if the disruption extends beyond the current inventory cushion, prices could rise further. PVM analyst John Evans echoed this, stating, 'Short of stopping both oil-price-affecting wars and curing the global refinery (capacity) problem, our fraternity is wondering where an inoculation against $120 Brent can be found.
What's still developing
- Saudi state media released footage Sunday showing damage to homes and a mosque in southern Jazan province following what it said was a Houthi attack.
- LONDON: A fresh wave of attacks across key Middle East energy routes sent oil prices more than 2% higher Monday, as trade rs weighed growing threats to crude supplies after a major Saudi pipeline was shut down.
- Oil prices rose more than 3% on Monday after new strikes on Saudi Arabian energy infrastructure and attacks on ships in the Middle East compounded supply concerns.