Oil prices rose on Tuesday as supply concerns remained elevated after attacks on Saudi Arabia’s energy infrastructure disrupted the kingdom’s East-West pipeline, while uncertainty over shipping through the Strait of Hormuz added to market pressure.
Brent crude futures rose US$1.24, or 1.18%, to US$106.93 a barrel at 0026 GMT, after gaining 1% in the previous session. US West Texas Intermediate futures also climbed US$1.29, or 1.24%, to US$102.65 a barrel following a 1.3% increase previously.
Fresh attacks by Iran-backed Houthi forces in Yemen on Saudi Arabia on Monday fuelled concerns that the conflict could widen and further disrupt global oil supplies. Gulf Arab states have also postponed planned discussions with Iran.
The Houthis launched missile and drone attacks on the Khamis Mushait military airbase in southern Saudi Arabia, targeting aircraft hangars, radar systems, runways and ammunition depots in retaliation for Saudi strikes in Yemen.
The attacks followed strikes on Saudi Arabia on Friday which Riyadh blamed on Iranian-backed fighters in Iraq. The attacks disrupted the East-West pipeline, which allows Saudi Arabia to bypass the Strait of Hormuz when exporting oil.
“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 normalise,” said Tim Waterer, chief market analyst at KCM Trade.
Vessel traffic through the Strait of Hormuz fell to fewer than 10 transits a day over the weekend, compared with a 10-day average of 14. The route typically carried about one-fifth of global oil supplies before the US-Israeli war on Iran began on Feb 28.
Saudi Arabia could exhaust oil available for export within days if the East-West pipeline remains offline, according to Saudi buyers and traders, potentially removing up to 4% of global oil supply from the market.
The pipeline has been used to reroute around four million barrels of oil per day, or about 4% of global supply, to the Red Sea port of Yanbu.
“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.
Meanwhile, Ukrainian President Volodymyr Zelenskiy said Kyiv was ready to support a US proposal for a ceasefire covering energy sites, provided Washington could ensure Moscow was genuinely prepared to halt its war in Ukraine.
Reuters
