Oil prices rise as Saudi pipeline outage, fresh attacks raise supply concerns

Oil prices spiked on Tuesday amid worries over potential disruptions to supply following attacks on Saudi Arabia's energy infrastructure, leaving the East-West pipeline offline and raising doubts about efforts to mitigate shipping risks in the Gulf. Brent crude futures jumped $1.24, or 1.18%, to $106.93 a barrel, while US West Texas Intermediate futures climbed $1.29, or 1.24%, to $102.65 a barrel, after both rose 1% previously.

The Houthi forces in Yemen launched fresh assaults on Saudi Arabia on Monday, targeting the Khamis Mushait military airbase in retaliation for Saudi strikes in Yemen. The attacks come after earlier assaults on Saudi Arabia on Friday, which Riyadh blamed on Iranian-backed fighters in Iraq, disrupting the East-West pipeline that enables oil exports to bypass the blockaded Strait of Hormuz.

This has heightened concerns over widening conflict in the Middle East and its potential impact on global oil supplies. Oil traders view each fresh attack or infrastructure hit as an incremental supply risk, closely monitoring any signs that the East-West pipeline or Hormuz flows may resume. Commodity vessel traffic through the Strait of Hormuz dwindled to fewer than 10 transits a day over the weekend, down from an average of 14 over the previous 10 days, prompting concerns over a route that typically carries about one-fifth of global oil supplies before the US-Israeli war on Iran commenced on February 28.

Saudi Arabia may run out of oil intended for export within days unless it restores operations on the East-West pipeline, which could eliminate up to 4% of global oil supply from the market. Traders are now focused on the extent of the East-West outage, as any prolonged disruption could significantly escalate prices.