Oil Jumps as Supply Concerns Mount

Oil prices rose by more than 3% during Monday’s trading session, amid escalating supply concerns following a drone attack that halted Saudi Arabia’s East-West pipeline. Brent crude futures climbed $3.21, or 3.1%, to $107.82 per barrel, while West Texas Intermediate (WTI) crude futures rose $3.17, or 3.2%, to $103.22 per barrel.

Commodity analysts at ING said the increase came after an “escalation in attacks on energy infrastructure in Saudi Arabia,” including strikes on the vital East-West pipeline.

In a separate development, a ship in the Strait of Hormuz was hit by a projectile, causing a fire and forcing the evacuation of its crew, according to the UK Maritime Trade Operations (UKMTO). Iran stated that one person was killed and four others were injured among the crew of an Iranian commercial vessel attacked off its coast.

Oil had surged 8% the previous week due to supply disruptions, surpassing the $100-per-barrel mark for the first time since July.

Meanwhile, European natural gas prices jumped sharply on Monday, reaching their highest levels since late 2022, as fears grew over gas supplies from the Middle East and tensions persisted in the Gulf region. The price of the standard European natural gas contract, TTF, for delivery one month ahead rose more than 5% at the start of trading on the Amsterdam exchange, reaching 83.75 euros per megawatt-hour, equivalent to approximately $97.13, its highest level since late 2022.

Investor concerns intensified over the potential for prolonged disruptions in liquefied natural gas (LNG) supplies, given the closure of the Strait of Hormuz, a critical chokepoint for global energy shipments. European gas prices have nearly tripled since the beginning of the year, amid the ongoing Iran-related crisis and its impact on global energy flows. European countries are facing mounting pressure to refill their gas reserves ahead of winter.

Traders fear that any prolonged supply disruption could intensify global competition for LNG shipments, potentially driving prices even higher in the coming months and exacerbating challenges for European economies.