International crude oil prices rose by nearly 3% on Monday following attacks on Saudi Arabia’s East-West oil pipeline and an attack on an Iranian cargo vessel in the Strait of Hormuz, Reuters reported.
According to Reuters data, Brent crude was trading at $107.54 a barrel on Monday, up $2.98, or 2.8%, from Sunday. West Texas Intermediate (WTI) crude rose $2.88, or 2.9%, to $102.93 a barrel.
A senior official in the commodities strategy division of global energy market monitor ING said the main driver behind the rise was the attack on Saudi Arabia’s energy infrastructure, particularly the East-West pipeline, which has disrupted oil supplies from the kingdom.
The pipeline was targeted by several drones and missiles launched by Yemen’s Houthi rebels toward Riyadh and Medina on September 11. A source at Saudi Arabia’s Ministry of Energy and Mineral Resources said the pipeline sustained significant damage and has been shut down. It cannot be brought back online until repairs are completed.
The roughly 1,200-kilometre East-West pipeline stretches across the Arabian Peninsula and is a critical part of Saudi Arabia’s oil export infrastructure.
Its importance has increased amid disruptions in the Strait of Hormuz linked to the ongoing US-Iran conflict. With shipping through the strategic waterway suspended, transporting Saudi oil through alternative routes has become increasingly important.
The latest attacks came at a time when oil prices have already been rising almost daily because of the disruption to shipping through the Strait of Hormuz.
Saudi Arabia holds some of the world’s largest proven oil reserves and remains a major supplier to global energy markets. The Gulf kingdom currently accounts for an estimated 5% to 6% of global oil demand, making disruptions to its production and export infrastructure a significant concern for international markets.
The latest price surge reflects growing fears that continued attacks on energy infrastructure and disruptions to key shipping routes could further tighten global oil supplies.
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