Saudi Arabia’s East-West oil pipeline closure raises fears over global oil supply

Oil prices surged above $106 on Tuesday amid worries about supply disruptions following attacks on Saudi Arabia's vital East-West pipeline. Tensions in the Gulf region also contributed to uncertainty surrounding future oil flows. Brent crude futures jumped $1.24, or 1.18%, to $106.93 per barrel, while US West Texas Intermediate (WTI) rose $1.29, or 1.24%, to $102.65 per barrel. Both benchmarks had climbed during the previous trading session as well.

The recent price increase followed attacks that prompted Saudi Arabia to suspend operations on the East-West pipeline, a key conduit for transporting crude from the kingdom's oil-producing areas to the Red Sea. The pipeline, with a capacity of about 4 million barrels per day, constitutes roughly 4% of global oil supply. Prolonged disruption could tighten international crude markets and push prices higher.

The pipeline has gained significance as shipping through the Strait of Hormuz has been hampered due to ongoing regional tensions. It enables Saudi Arabia to export crude while minimizing reliance on the strategic waterway. Market concerns have also risen following fresh attacks by Iran-backed Houthi forces in Yemen.

Gulf Arab nations postponed scheduled talks with Iran, heightening fears that the broader Middle East conflict could escalate. Analysts suggested that continued disruptions to energy infrastructure and shipping routes could result in further gains in crude prices. Traders are keenly watching developments across the region for any indications of additional threats to oil production and exports.

With alternative export routes facing pressure and uncertainty surrounding regional stability, global energy markets remain exposed to potential supply shocks.