Oil Prices Climb as Saudi Pipeline Outage, Fresh Attacks Stoke Supply Fears
Sept. 15 (Reuters) —Oil prices rose on Tuesday as supply concerns persisted after attacks on Saudi Arabian energy infrastructure left the kingdom's East-West pipeline offline, raising doubts about efforts to calm shipping risks in the Gulf.
Brent crude futures rose $1.24, or 1.18%, to $106.93 a barrel at 0026 GMT, after climbing 1% earlier. U.S. West Texas Intermediate futures were up $1.29, or 1.24%, at $102.65 a barrel, following a 1.3% gain in the previous session.
The gains came as Iran-backed Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, while Gulf Arab states postponed planned discussions with Iran. The developments fueled concerns that the Middle East conflict could widen and disrupt global oil supplies.
The Houthis carried out a missile and drone attack on the Khamis Mushait military airbase in southern Saudi Arabia, hitting aircraft hangars, radar systems, runways and ammunition depots in retaliation for Saudi strikes in Yemen.
The assault followed attacks on Friday on Saudi Arabia that Riyadh blamed on Iranian-backed fighters in Iraq. Those strikes disrupted the East-West pipeline, a key route that allows Saudi oil exports to bypass the blockaded Strait of Hormuz.
“Oil traders are treating every fresh attack or infrastructure hit as incremental supply risk, while staying highly sensitive to any sign that the East-West pipeline or Hormuz flows could normalize,” said Tim Waterer, chief market analyst at KCM Trade.
Commodity vessel traffic through the Strait of Hormuz fell to fewer than 10 transits a day over the weekend, down from a 10-day average of 14. The decline raised alarms over a route that typically carried about one-fifth of global oil supplies before the U.S.-Israeli war on Iran began on Feb. 28.
Saudi Arabia could begin to exhaust oil available for export within days unless it restores operations on the East-West pipeline, according to Saudi buyers and traders. A prolonged outage could remove as much as 4% of global oil supply from the market.
The world's biggest exporter has used the pipeline to reroute around 4 million barrels per day — roughly 4% of global supply — to the port of Yanbu on the Red Sea. The facility is central to Riyadh's ability to keep crude flowing when Hormuz is deemed too risky for shipping.
“The big question for traders right now is the duration of the East-West outage. Any prolonged disruption and the associated supply loss could easily push prices to the next level higher,” Waterer added.
For refiners and importers, the outage adds another layer of uncertainty to an already tense market. With alternative routes limited, even a short disruption in Saudi exports can quickly tighten available supply and sharpen competition among buyers in Asia and Europe.
Separately, President Volodymyr Zelenskiy said on Monday that Kyiv was ready to support a U.S. proposal for a Russia-Ukraine ceasefire on energy sites only if Washington could ensure Moscow was genuinely ready to end its war on Ukraine.
Reporting by Pranav Mathur in Bengaluru; Editing by Christian Schmollinger