Oil prices rise on Saudi supply concerns

Oil prices rise on Saudi supply concerns

Oil prices climbed on Tuesday as concerns over supply disruptions grew following attacks on Saudi Arabia’s energy infrastructure and continued uncertainty over shipping through the Gulf.

Brent crude futures gained $1.37, or 1.3%, to $107.05 a barrel, while US West Texas Intermediate (WTI) rose $1.53, or 1.51%, to $102.92 a barrel. Both benchmarks had advanced by more than 1% in the previous session.

Fresh attacks by Iran-backed Houthi forces in Yemen on Saudi Arabia further heightened market concerns. The Houthis launched missiles and drones at the Khamis Mushait military airbase in southern Saudi Arabia, targeting aircraft hangars, radar equipment, runways and ammunition depots. They described the strikes as retaliation for Saudi military operations in Yemen.

The latest attacks followed Friday’s strikes that Riyadh blamed on Iran-backed fighters in Iraq. Those attacks disrupted Saudi Arabia’s East-West oil pipeline, a key route that allows the kingdom to transport crude to the Red Sea while avoiding the Strait of Hormuz.

Market analysts said traders now view every attack on oil facilities or transport routes as a potential threat to global supplies. Uncertainty over the restoration of the East-West pipeline and the security of the Strait of Hormuz has added further support to oil prices.

Vessel traffic through the Strait of Hormuz also fell to fewer than 10 transits a day over the weekend, compared with a 10-day average of 14. The waterway normally handles around one-fifth of global oil supplies.

Saudi Arabia could face growing pressure to restore the East-West pipeline quickly. Traders estimate that the disruption could eventually affect up to 4 million barrels of crude per day, equivalent to roughly 4% of global oil supply.

Analysts at ING said oil prices would likely remain elevated until markets gain greater clarity about the damage and the duration of the pipeline outage.

Meanwhile, Ukrainian President Volodymyr Zelenskyy said Kyiv could support a US proposal for a limited Russia-Ukraine ceasefire covering energy infrastructure, provided Washington can ensure that Moscow genuinely intends to halt attacks on energy facilities.