Oil prices rise nearly 2% on Tuesday

Oil prices rose nearly 2 per cent on Tuesday as supply disruption concerns persisted after attacks on Saudi Arabia’s energy infrastructure left the kingdom’s East-West pipeline offline and raised doubts over efforts to ease shipping risks in the Gulf.

Brent crude futures gained $1.87, or 1.77 per cent, to $107.55 a barrel at 0633 GMT, while US West Texas Intermediate futures rose $1.88, or 1.85 per cent, to $103.27. Both benchmarks gained more than 1 per cent in the previous session.

Fresh attacks by Iran-backed Houthi forces on Saudi Arabia and the postponement of planned Gulf Arab discussions with Iran fuelled concerns that the Middle East conflict could widen and further disrupt global oil supplies.

The East-West pipeline, which allows Saudi Arabia to bypass the blocked Strait of Hormuz, was disrupted by attacks on Friday. Saudi Arabia uses the pipeline to reroute about 4 million barrels per day to the Red Sea port of Yanbu, equivalent to around 4 per cent of global oil supply.

Commodity vessel traffic through the Strait of Hormuz also fell to four on Monday from 10 a day earlier, according to preliminary Kpler data, adding to concerns over a route that carried about a fifth of global oil supplies before the US-Israeli war on Iran began on February 28.

Saudi oil buyers and traders said the kingdom could exhaust oil available for export within days if the East-West pipeline is not restored, potentially removing as much as 4 per cent of global supplies from the market.
Attribution: Reuters