Saudi Yanbu halt deepens oil strain as Europe scrambles for crude
European crude importers are racing to secure new oil shipments as markets brace for the loss of up to 4% of global supplies into October following attacks on Saudi oil infrastructure.
Oil prices rose by US$3 on Tuesday (Sep 15) following reports that shipments at Saudi Arabia’s Red Sea export hub, Yanbu, were suspended and some cargo deliveries to European customers were canceled. This news intensified concerns that disruptions to a crucial oil-export route might continue for several weeks. US West Texas Intermediate crude futures outperformed Brent, as worries about Riyadh's supply troubles grew, pushing investors to buy US crude as a substitute.
Both contracts closed at their highest since May 19, with Brent increasing by US$3.07, or 2.9%, to US$108.75 per barrel, and WTI climbing US$4.44, or 4.38%, to US$105.83 per barrel. The port of Yanbu holds significant importance for global supply since the US-Israeli war on Iran closed the Strait of Hormuz, which previously carried one-fifth of the world's oil and liquefied natural gas supplies.
After Yemen's Iran-aligned Houthis attacked the East-West Pipeline on Friday, Saudi Arabia had to shut the key export route. Shipping industry sources informed Reuters on Tuesday that oil loadings at the Red Sea terminal in Yanbu had been halted, and European customers were informed that some late-September crude cargoes would be canceled.
Analysts anticipate European refiners to shift to US supplies, which may lift WTI relative to Brent prices. Meanwhile, attacks on energy infrastructure in Russia and Ukraine drove US diesel futures and diesel cracks to a record high.
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- Oil settles US$3 higher on Yanbu disruption, Saudi cargo cancellations businesstimes.com.sg
