Oil climbs as Saudi pipeline outage, fresh attacks heighten supply concerns

Oil prices climbed on Tuesday as traders remained apprehensive about potential supply disruptions following attacks on Saudi Arabian energy infrastructure. The East-West pipeline, which facilitates oil exports by bypassing the Strait of Hormuz, became offline due to assaults, raising doubts about efforts to mitigate shipping risks in the Gulf.

Brent crude futures increased by $1.37, or 1.3%, to $107.05 per barrel, while U.S. West Texas Intermediate futures climbed by $1.53, or 1.51%, to $102.92 per barrel. Both indices saw gains of over 1% in the prior session.

The Houthi forces backed by Iran in Yemen carried out fresh attacks on Saudi Arabia on Monday, hitting military installations, runways, and ammunition depots in retaliation for Saudi strikes in Yemen. The attacks followed earlier strikes on Friday, which Riyadh attributed to Iranian-backed fighters in Iraq, disrupting the East-West pipeline. Oil traders view each new attack or infrastructure hit as an incremental supply risk, closely monitoring any indications that the pipeline or Hormuz flows might resume.

Commodity vessel traffic through the Strait of Hormuz dwindled to fewer than 10 transits per day over the weekend, down from an average of 14 over the past 10 days. This decline has heightened concerns about a route that typically handled about one-fifth of global oil supplies before the U.S.-Israeli conflict with Iran commenced on February 28.

Saudi Arabia might run out of exportable oil within days if it fails to restore the East-West pipeline, potentially eliminating up to 4% of global oil supply from the market, according to Saudi buyers and traders.

The international community remains uncertain about the extent of damage to the pipeline and its duration of outage. Prices are expected to stay supported until there is clarity on the situation. Ing analysts stated, "Prices are likely to remain well supported until we get clarity."