Oil tops $107 as Saudi pipeline outage deepens Hormuz supply fears

Oil prices surpassed $100 per barrel on September 16 as market participants evaluated reduced physical supplies, disruptions to Saudi export routes, and uncertainty surrounding the resumption of normal shipping through the Strait of Hormuz. Brent crude traded at around $107.84 per barrel, and West Texas Intermediate reached $104.89 in Asian trading at 9:47 am Tokyo time.

Both benchmarks marked their highest settlement levels since May 19. The recent price surge has been fueled by concerns over a prolonged Hormuz disruption. Saudi Arabia has suspended oil loadings at its Yanbu port following damage to the East-West pipeline, eliminating a crucial route for moving crude to the Red Sea without using Hormuz.

The Saudi-led disruption has led to some cancellations of crude shipments to European customers. The Strait of Hormuz remains the primary source of uncertainty, with only four commercial vessels passing through the waterway on Monday, compared to an average of about 125 daily transits pre-war, according to Kpler data cited by Reuters.

The market now faces a dual supply risk: Hormuz is severely constrained, while an alternative Saudi export route has also been compromised. Despite a significant increase in U.S. inventories, analysts caution that these gains may not alleviate the global physical supply shortage. Oil is traded globally, and the immediate issue lies in the loss of dependable Gulf export capacities and shipping routes.

The International Energy Agency has been monitoring the disruption, highlighting that Middle East supply losses have reached unprecedented levels and materially altered global oil flows.