Oil surges on report Saudi pipeline will take weeks to reopen
The halt of the pipeline knocks out Saudi Arabia’s most important workaround since the Iran war choked off exports from the Persian Gulf
Oil prices surged following a report that Saudi Arabia may take weeks to reopen a key pipeline after it was struck by militants. The East-West pipeline, which can transport about 7 million barrels of oil per day to the Red Sea hub of Yanbu, has been out of service since the attack. The disruption is expected to last several weeks, according to two regional officials quoted by the Associated Press.
Brent crude futures rose about 5 percent toward $110 a barrel, before slightly retracting. US Energy Secretary Chris Wright predicted the pipeline would be back online "very soon," but the Saudi energy ministry and Saudi Aramco have not yet commented. The halt of the pipeline, which provides an important workaround around the Strait of Hormuz during the US-Iran conflict, could lead to reduced output and higher prices if the outage extends.
Analysts suggest that if the pipeline resumes quickly, the impact on oil prices could be limited, as Yanbu's storage could be tapped. However, a prolonged shutdown could force output cuts, potentially driving prices higher. The market for oil products is already strained, with diesel futures trading at around $200 a barrel due to supply disruptions in the Middle East and Russia.
The global economy is facing inflationary pressures as the cost of natural gas and fuels continues to rise.
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