Oil Tops $107 as Saudi Arabia Shutdown Pipeline
Oil prices rose Monday as a drone attack on Saudi Arabia’s East-West Oil Pipeline added to concerns over global crude supplies, while security risks in the Strait f Hormuz remained elevated.
Concerns over global crude supplies intensified following an attack on Saudi Arabia’s that could affect 4% of global supply. International benchmark Brent crude futures for November delivery traded at $107.16 a barrel, up 2.5% from the previous close of $104.61.
US benchmark West Texas Intermediate (WTI) crude futures for October delivery rose 2.4% to $102.54 a barrel from $100.05.
Saudi Arabia’s Foreign Ministry said over the weekend that repair work was underway on the East-West Oil Pipeline in the Riyadh-Medina region after it was targeted by several drones.
The ministry condemned the attack, which caused injuries and damage. The Energy Ministry said the pipeline was shut down as a precaution following the Sept. 10 attack.
With a maximum capacity of around 7 million barrels per day, the pipeline is an important part of Saudi Arabia’s oil export infrastructure. Its temporary closure has raised concerns over possible supply disruptions and supported oil prices.
However, the shutdown is aimed at securing the damaged areas and inspecting the pipeline and related facilities. It does not necessarily indicate extensive damage or a prolonged outage.
Meanwhile, continued security risks in the Strait of Hormuz are keeping concerns over global oil supplies elevated and providing further support to prices.
United Kingdom Maritime Trade Operations (UKMTO) said Monday that a vessel transiting the Strait of Hormuz was struck by an unidentified type of munition.
It also reported that one person was killed and three others injured after an Iranian commercial vessel was targeted near Qeshm Island in the Strait.
The impact of supply disruptions in the Middle East on oil markets is also being reflected in price forecasts.
US Energy Information Administration (EIA) raised its oil price forecasts for this year and next. According to EIA’s September Short-Term Energy Outlook, the average price of international benchmark Brent crude rose to $91 per barrel in August.
Continued attacks on energy infrastructure amid the Russia-Ukraine war are also affecting oil prices.Russia’s Defense Ministry said Russian forces carried out overnight strikes on logistics centers as well as energy and railway infrastructure facilities in Ukraine.
US President Donald Trump on Sunday called on Ukrainian President Volodymyr Zelenskyy to halt attacks targeting diesel fuel infrastructure in Russia.
Trump said he had discussed the issue with Zelenskyy, adding: “Hit the targets, but not diesel, because it’s causing a diesel shortage.” Crude Oil Prices Decline as Trump Plans to End Iran War
