Oil prices rose on Tuesday as concerns over global supply disruptions intensified following attacks on Saudi Arabian energy infrastructure that left the kingdom’s East-West oil pipeline offline and raised fresh doubts over efforts to reduce shipping risks in the Gulf.
Brent crude futures climbed $1.37, or 1.3%, to $107.05 a barrel, while US West Texas Intermediate (WTI) futures increased $1.53, or 1.51%, to $102.92 a barrel. Both benchmarks had gained more than 1% in the previous session.
Fresh attacks by Iran-backed Houthi forces in Yemen on Saudi Arabia on Monday, coupled with the postponement of planned talks between Gulf Arab states and Iran, heightened fears that the regional conflict could widen and further threaten oil supplies.
The Houthis launched a missile and drone attack on the Khamis Mushait military airbase in southern Saudi Arabia, targeting aircraft hangars, radar systems, runways and ammunition depots. The group described the attack as retaliation for Saudi strikes in Yemen.
The latest developments followed attacks on Saudi Arabia on Friday that Riyadh blamed on Iranian-backed fighters in Iraq. The attacks disrupted the country’s East-West oil pipeline, which enables Saudi Arabia to bypass the Strait of Hormuz and transport crude to export facilities on the Red Sea.
“Oil traders are treating every fresh attack or infrastructure hit as incremental supply risk,” said Tim Waterer, chief market analyst at KCM Trade, noting that markets remain highly sensitive to any indication that the East-West pipeline or Strait of Hormuz flows could return to normal.
Strait of Hormuz Traffic Falls
Commodity 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 decline has raised further concerns over the key shipping route, which carried roughly one-fifth of global oil supplies before the US-Israeli war on Iran began on February 28.
Saudi Arabia could begin exhausting crude available for export within days if the East-West pipeline is not restored, according to Saudi buyers and traders. A prolonged outage could potentially remove as much as 4% of global oil supply from the market.
The world’s largest oil exporter has been using the pipeline to reroute around 4 million barrels per day, or approximately 4% of global supply, to the Red Sea port of Yanbu.
“Plenty of uncertainty remains over the extent of damage and the duration of the outage,” ING analysts said, adding that oil prices were likely to remain well supported until greater clarity emerged.
Ukraine Energy Ceasefire Proposal
Separately, Ukrainian President Volodymyr Zelenskiy said on Monday that Kyiv was prepared to support a US proposal for a ceasefire covering attacks on energy infrastructure, provided Washington could ensure that Moscow was genuinely prepared to halt such strikes as part of its war against Ukraine.
