Saudi Arabia temporarily shut the East-West pipeline late Friday following attacks a day earlier, sidelining a key route that has helped sidestep the Strait of Hormuz amid the US-Iran war. Officials have not given any indication of when operations will restart. The attacks were reported on Sept. 10, and separate satellite imagery shows damage from a Sept. 13 drone strike at pipeline facilities.
Iraq moved quickly to address spillover risk: on Saturday, Prime Minister Ali Al-Zaidi instructed officials to begin an investigation after concluding the strikes came from a site in a region adjacent to Iran. With capacity around 7 million barrels a day, the line is central to regional flows at a moment when the global energy backdrop is already tight.
Oil rallied on the headlines, then eased off peak gains. Brent climbed as much as 3.6% to top $108, and by 7:56 a.m. in Singapore the November contract was up 2.9% at $107.64. WTI hovered near $103, with October futures up 2.5% to $102.56.
Under the surface, pricing signaled tighter near-term supply. Brent's prompt spread widened to $5.39 a barrel in backwardation from $3.84 a week earlier, a sign of stronger demand for barrels now versus later. The move extends a year in which crude has risen by more than three-quarters as the US-Iran conflict has rippled across the region, hobbling exports and shipping, while a recent pickup in Chinese purchases added support.
"It all boils down to the duration," said June Goh, a senior oil market analyst with Sparta Commodities SA. A swift resumption would likely limit the fallout since stocks held at Yanbu, at the pipeline's western terminus, are available to draw. If the halt stretches, she said it could lead to production cuts.
Yanbu storage could sustain exports for about five to seven days, Suvro Sarkar, who heads energy research at DBS Bank Ltd., noted, after which the impact would be "huge." With repair details still unclear, he said the near-term setup points toward a potential test of $120 a barrel.
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Oman's foreign minister, Badr Albusaidi, said the meeting that had been scheduled for later Monday with Iran and several Gulf states to set up a temporary Hormuz shipping corridor was postponed. Earlier, Bahrain announced it would skip the talks, citing in part the attack on the East-West pipeline, and Axios said Riyadh, too, had misgivings about the proposal.
Traders are also watching Yemen's Red Sea coast, where Iranian-backed Houthi advances could give the group more sway over traffic through the Bab el-Mandeb, another crucial chokepoint. The broader Middle East crisis has pushed up prices for crude, natural gas, and refined fuels like diesel. After US data showed inflation picked up in August, investors widely expect the Federal Reserve to raise rates this week.
Last week, US Treasury Secretary Scott Bessent said he intended to announce on Monday sanctions aimed at a major bank to pressure Tehran. At the same time, a blockade of Iran's ports is being enforced by the US Navy to constrict its energy exports.
What this means for your money: a key oil artery is offline with no restart signal, Yanbu stocks likely buy only a few days, and chokepoint risks are stacking up. That is why crude popped today - and why the path gets bumpier if repairs take time.
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