Oil Climbs as Saudi Pipeline Stays Offline, Houthi Attacks Intensify
Crude prices rose as Saudi Arabia's East-West pipeline remained offline after attacks, Houthi strikes continued, and Hormuz shipping traffic dropped.
Oil prices advanced on Tuesday as supply worries persisted following attacks on Saudi Arabian energy infrastructure that knocked the kingdom's East-West pipeline out of service and clouded prospects for reducing shipping risks in the Gulf.
Brent crude futures were up $1.24, or 1.18%, at $106.93 a barrel by 0026 GMT, building on a 1% gain in the prior session. U.S. West Texas Intermediate futures rose $1.29, or 1.24%, to $102.65 a barrel, after adding 1.3% earlier.
Iran-backed Houthi forces in Yemen mounted fresh strikes on Saudi Arabia on Monday, while Gulf Arab states put off planned talks with Iran, heightening fears that the Middle East conflict could broaden and disrupt global oil flows.
The Houthis said they targeted the Khamis Mushait military airbase in southern Saudi Arabia with missiles and drones, hitting aircraft hangars, radar systems, runways and ammunition depots. The group described the operation as retaliation for Saudi strikes in Yemen.
The assault followed attacks on Friday on Saudi Arabia that Riyadh attributed to Iranian-backed fighters in Iraq. Those strikes disrupted the East-West pipeline, which allows Saudi crude exports to bypass the blockaded Strait of Hormuz.
"Oil traders are treating every fresh attack or infrastructure hit as incremental supply risk, while staying highly sensitive to any sign that the East-West pipeline or Hormuz flows could normalise," said Tim Waterer, chief market analyst at KCM Trade.
Commodity vessel traffic through the Strait of Hormuz fell to fewer than 10 transits a day over the weekend, down from a 10-day average of 14. Before the U.S.-Israeli war on Iran began on February 28, the route typically carried about one-fifth of global oil supplies.
Saudi Arabia may run out of oil available for export within days unless it restores the East-West pipeline, a development that could remove as much as 4% of global oil supply from the market, according to Saudi buyers and traders. The world's largest exporter has used the pipeline to reroute roughly 4 million barrels per day to the port of Yanbu on the Red Sea.
"The big question for traders right now is the duration of the East-West outage. Any prolonged disruption and the associated supply loss could easily push prices to the next level higher," Waterer added.
Separately, Ukrainian President Volodymyr Zelenskiy said on Monday that Kyiv was prepared to back a U.S. proposal for a Russia-Ukraine ceasefire covering energy sites only if Washington could guarantee that Moscow was genuinely ready to end its war on Ukraine.