Oil Rises as Saudi Pipeline Halts and New Attacks Occur - Sarmad
Oil prices rose on Tuesday, as concerns persisted over supply disruptions following attacks on Saudi Arabia’s energy infrastructure that halted the pipeline linking the kingdom’s east and west, casting doubt on efforts to mitigate shipping risks in the Gulf.
Brent crude futures rose $1.24, or 1.18 percent, to $106.93 per barrel at 0026 GMT, after gaining 1 percent earlier. West Texas Intermediate (WTI) crude futures climbed $1.29, or 1.24 percent, to $102.65 per barrel, following a 1.3 percent rise in the previous session.
Iran-backed Houthi forces in Yemen launched new attacks on Saudi Arabia on Monday, while Gulf states postponed scheduled talks with Iran, fueling fears that the conflict in the Middle East could expand and disrupt global oil supplies.
The Houthis carried out missile and drone strikes on the King Khaled Military City airbase in southern Saudi Arabia, targeting aircraft hangars, radar systems, runways, and ammunition depots, in retaliation for Saudi airstrikes in Yemen.
This followed Friday’s attacks on Saudi Arabia, which Riyadh blamed on Iran-backed fighters in Iraq and which disrupted the east-west pipeline that allows oil exports to bypass the besieged Strait of Hormuz.
Tim Waterer, chief market analyst at KCM Trade, said, “Oil traders treat every new attack or infrastructure targeting as an additional supply risk, while remaining highly sensitive to any signs that flows through the east-west pipeline or the Strait of Hormuz might return to normal.”
Ship traffic through the Strait of Hormuz fell to fewer than 10 voyages per day at the start of the week, down from an average of 14 over the previous 10 days, raising concerns about this route, which typically carried about one-fifth of global oil supplies before the start of the US-Israeli war on Iran on February 28.
Saudi buyers and traders said the kingdom could begin depleting its available exportable oil within days unless the east-west pipeline resumes operations, potentially removing up to 4 percent of global oil supplies from the market.
The world’s largest oil exporter had used this pipeline to redirect approximately four million barrels per day—about 4 percent of global supplies—to the Red Sea port of Yanbu.
Waterer added, “The big question facing traders now is how long the east-west pipeline outage will last. Any prolonged disruption and the associated supply losses could easily push prices to the next higher level.”
Meanwhile, Russian President Volodymyr Zelenskyy said yesterday that Kyiv is ready to support a US proposal for a ceasefire between Russia and Ukraine at energy-related sites, provided Washington ensures that Moscow is truly prepared to end its war on Ukraine.
