Brent crude climbed above $108 a barrel on Tuesday as uncertainty grew over when Saudi Arabia’s East-West pipeline would reopen, with fresh Houthi strikes on the kingdom and halted loadings at its Red Sea export terminal adding to supply fears.
By 1:00 p.m. ET, Brent futures had risen 3% to $108.88 per barrel, while U.S. West Texas Intermediate was up 4.7% at $106.12. Prices have gained around 20% this month as fighting in the Persian Gulf has escalated.
Saudi Arabia shut the pipeline last week after drone attacks originating from Iraq struck it, halting the route the kingdom had used to bypass the Strait of Hormuz as the U.S. and Iran battle for control over the waterway. The pipeline can move up to 7 million barrels per day. Riyadh has described the closure as a precautionary measure but has not given a damage assessment or a timeline. U.K. authorities fear the line may stay mostly shut for six weeks, according to Bloomberg.
U.S. Energy Secretary Chris Wright offered a shorter estimate. “This will be a brief and temporary interruption. It will be measured in days,” he told CNBC in Houston, where G20 energy officials are meeting. Wright said Iran-backed proxy groups carried out the strikes and that the Saudis were shifting some exports back through Hormuz with U.S. military support while the pipeline is down.
Crude loadings at the Yanbu terminal on Saudi Arabia’s Red Sea coast had been halted as of Tuesday, shipping industry sources told Reuters, which also reported that Saudi officials had notified European buyers that certain late-September shipments would not proceed.
The closure of the East-West line followed a wave of attacks on the kingdom. Iran-backed Houthi militants in Yemen carried out additional strikes on Monday, firing drones and ballistic missiles at the cities of Khamis Mushait, Abha and Taif, a spokesperson for the Saudi-led coalition said. The Houthis claimed to have hit a military air base in Khamis Mushait.
A separate disruption weighed on markets. Libya’s National Oil Corporation said it suspended operations at three oil fields after members of the Petroleum Facilities Guard shut a valve on a crude export pipeline, and cautioned that a force majeure declaration could follow.
At least two tankers have come under attack in the Strait of Hormuz since Saturday, according to the United Kingdom Maritime Trade Operations Centre. U.S. Central Command disputed an Iranian Revolutionary Guard claim that the Panamanian-flagged El Gaia had struck a naval mine, saying the vessel was hit by an Iranian missile last month.
U.S. diesel futures rose more than 5.9% on Tuesday, on track for a record close. The national average price for diesel reached $6.23 per gallon, a record, The Hill reported, citing AAA data.