Saudi Arabia's Hormuz Bypass Pipeline Closure Sparks Oil Price Surge
Oil prices surged as Saudi Arabia kept its East-West pipeline closed following drone strikes, removing a key route for transporting crude away from the Persian Gulf. Brent crude hit $109.80 per barrel before settling at $105.34 on Monday, while U.S. crude rose 0.9% to close at $100.92. The pipeline can carry up to 7 million barrels a day and its closure could remove approximately 120 million barrels from global supply over the next month if repairs take several weeks or months. The drone attacks, attributed to Iraq-launched drones, have stalled diplomatic efforts aimed at stabilizing regional tensions. A planned meeting between Iran and Gulf Arab states in Oman was postponed due to the incident. Security conditions further deteriorated with another tanker attack reported on Sunday and Houthi militants reportedly taking control of Perim Island near a critical shipping chokepoint. Analysts warn that global oil markets are already strained, having drawn down 507 million barrels from inventories since late February as U.S.-Iran tensions escalated. The prolonged pipeline closure could further tighten supply and push prices higher.
Topics: commodities energy_infrastructure geopolitical_risk oil