Oil prices climbed on Tuesday as fresh attacks on energy infrastructure and the continued shutdown of Saudi Arabia’s East-West pipeline intensified concerns over global supplies and uncertainty surrounding shipping through the Gulf.
Brent crude futures gained $1.37, or 1.3 per cent, to reach $107.05 a barrel at 0406 GMT. US West Texas Intermediate crude rose $1.53, or 1.51 per cent, to $102.92 a barrel. Both benchmarks had already advanced by more than 1 per cent in the previous session.
The latest pressure followed Friday’s attacks on Saudi Arabia, which Riyadh blamed on Iran-backed fighters operating from Iraq. The strikes disrupted the kingdom’s East-West pipeline, an important route that enables Saudi oil exports to bypass the blockaded Strait of Hormuz.
Tim Waterer, chief market analyst at KCM Trade, said traders were treating every new attack on energy infrastructure as an additional threat to supply. At the same time, markets remained highly sensitive to any indication that operations on the East-West pipeline or oil movements through the Strait of Hormuz could return to normal.
Shipping activity through the Strait of Hormuz has fallen sharply. Commodity vessel traffic dropped to fewer than 10 crossings a day over the weekend, compared with a 10-day average of 14.
The decline has increased concerns over the security of one of the world’s most important energy corridors. Before the US-Israeli war against Iran began on February 28, roughly one-fifth of global oil supplies passed through the Strait of Hormuz.
Pressure could increase further if Saudi Arabia is unable to restore its East-West pipeline quickly. According to Saudi oil buyers and traders, the kingdom could begin exhausting the oil currently available for export within days if pipeline operations remain suspended.
A prolonged outage could potentially remove as much as 4 per cent of global oil supply from the international market, adding further upward pressure to already elevated crude prices.
