The Brent crude price touched $108 per barrel on Monday as a drone attack on Saudi Arabia’s East-West pipeline opened another dangerous front in the Middle East energy crisis.
Brent later eased to about $107.22 per barrel, while US West Texas Intermediate traded around $102.66. The retreat did little to calm the market.
Traders are now weighing the possible loss of another major export route at a time when flows through the Strait of Hormuz remain heavily disrupted.
Saudi Arabia shut the pipeline after Friday’s attack but has not disclosed the extent of the damage or provided a timetable for restarting operations.
Pipeline carries 4% of global supply
The East-West pipeline can transport up to seven million barrels of crude daily from oilfields near the Persian Gulf to Yanbu on the Red Sea.
Saudi Arabia had been moving roughly four million barrels per day through the route, equivalent to about 4 percent of global supply, to bypass restrictions around Hormuz.
Yanbu reportedly has enough oil in storage to maintain exports for only five to seven days. A prolonged shutdown could therefore remove more Saudi barrels from an already tight market.
“It’s unclear how severe any potential damage is, or how long it will be out of action,” ING commodity strategists said.
Diplomacy loses momentum
A planned meeting in Oman aimed at easing tensions was postponed, weakening hopes of an immediate diplomatic breakthrough.
ING still expects Brent to average about $80 per barrel in the final quarter, arguing that sizeable oil volumes continue to move through Hormuz. That forecast now faces an uncomfortable test.
US President Donald Trump added to the uncertainty on Sunday by suggesting that American forces could remain in Iran and “keep the oil.” He also predicted that petrol prices would fall sharply once the conflict ended.
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