Oil prices rise as Saudi supply concerns deepen

Highlights

Brent rose 0.66%, while WTI gained 1.16%.
The Saudi East-West Pipeline remains offline.
Up to 4% of the global oil supply could be at risk.

Brent crude futures rose 0.66% to $106.38 a barrel, while U.S. West Texas Intermediate futures gained 1.16% to $102.57. Prices climbed as the continued shutdown of Saudi Arabia’s East-West Pipeline and fresh attacks on the kingdom intensified concerns over crude supplies, Reuters reported.

Saudi export routes face mounting pressure

The immediate concern is Saudi Arabia’s East-West Pipeline, which remained offline following attacks on Friday. The system carries crude across the kingdom to the Red Sea, providing Saudi Arabia with an alternative export route that avoids the Strait of Hormuz, one of the world's most important maritime energy corridors.

The disruption could threaten up to 4% of global oil supply if the pipeline remains unavailable for an extended period. Estimates for repairs range from a rapid restoration to as long as eight weeks, leaving uncertainty over how much crude Saudi Arabia can continue shipping through its Red Sea facilities.

The security situation deteriorated further Monday when Iran-backed Houthi forces launched dozens of missiles and drones toward Saudi Arabia. The attacks targeted the Khamis Mushait military air base in the south of the kingdom following Saudi strikes in Yemen.

Shipping disruption adds to market risk

Pressure is also building around maritime transport. Commodity vessel traffic through the Strait of Hormuz fell to just four ships on Monday, compared with 10 the previous day, preliminary Kpler data showed.

Another incident added to concerns after the Panama-flagged tanker El Gaia was taken under tow toward an Omani port following a fire in its engine room after an attack.

Supply risks are not limited to the Gulf. Three of Russia’s six largest diesel-producing refineries have significantly reduced or halted production this month after sustaining damage in drone attacks, tightening the outlook for refined fuels as crude markets are already under strain.

A prolonged outage could push prices higher

The duration of the Saudi pipeline shutdown has become increasingly important for global energy markets. Goldman Sachs sees a greater probability of Brent exceeding $120 a barrel under a scenario involving prolonged Gulf production losses. Capital Economics estimates that several weeks without the East-West Pipeline could push Brent toward $130 if demand and Hormuz flows fail to adjust.

With the pipeline still offline and maritime traffic through Hormuz sharply reduced, Saudi Arabia has less flexibility to redirect crude exports if disruptions persist. A prolonged outage could further tighten physical supply, raise fuel costs, and reinforce inflation pressures at a time when global financial markets are already adjusting to higher interest rate expectations.

As we previously reported, Iran and U.S. intensified shipping attacks near Hormuz.

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