Oil prices rose on Tuesday as concerns over supply disruptions persisted after attacks on Saudi Arabian energy infrastructure left the kingdom’s East-West pipeline offline and cast doubt on efforts to ease shipping risks in the Gulf.
Brent crude futures rose $1.37, or 1.3 per cent, to $107.05 a barrel at 0406 GMT, while US West Texas Intermediate futures were up $1.53, or 1.51 per cent, at $102.92 a barrel. Both benchmarks rose more than 1 per cent in the previous session.
Iran-backed Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, while Gulf Arab states postponed planned discussions with Iran, fuelling 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.
This followed attacks on Friday on Saudi Arabia, which Riyadh blamed on Iranian-backed fighters in Iraq, that disrupted the country’s East-West pipeline, which allows 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 normalise,” said Tim Waterer, chief market analyst at KCM Trade.
Commodity vessel traffic through the Strait of Hormuz dropped to fewer than 10 transits a day over the weekend, from a 10-day average of 14, raising concerns over a route that typically carried about one-fifth of global oil supplies before the US-Israeli war on Iran began on February 28.
Saudi Arabia could begin to exhaust oil available for export within days unless it restores operations on the East-West pipeline, potentially removing as much as 4 per cent of global oil supply from the market, according to Saudi buyers and traders.
The world’s biggest exporter has used the pipeline to reroute around 4 million barrels per day — around 4 per cent of global supply — to the port of Yanbu on the Red Sea.
“Plenty of uncertainty remains over the extent of damage and the duration of the outage for the East-West pipeline in Saudi Arabia. Prices are likely to remain well supported until we get clarity,” ING analysts said in a note.
Separately, Ukraine’s president Volodymyr Zelenskiy said on Monday that Kyiv was ready to support a US proposal for a Russia-Ukraine ceasefire on energy sites only if Washington could ensure Moscow was genuinely ready to end its war on Ukraine. – Reuters