The price of Brent oil rose to $105.74 per barrel on Tuesday due to attacks on Saudi Arabia's energy infrastructure and the disruption of the East-West pipeline in the country. These attacks have raised concerns about damage to energy infrastructure and transportation routes, increasing the likelihood that repairs may take time.
Rising Oil Prices and Their Impacts
The price of Brent oil reached $108.43 earlier in the day, while West Texas Intermediate crude also increased to $101.66 per barrel. This price increase has occurred in the wake of new attacks by Iranian-backed Houthi forces on Saudi Arabia on Monday. These attacks have disrupted Gulf Arab countries' plans for dialogue with Iran.
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Hamad Hussein, a senior economist at Capital Economics, stated that these attacks may affect investors' expectations in the oil market and influence the severity and duration of tensions. Houthi forces announced on Monday that they had attacked a military airbase in Khamis Mushait in southern Saudi Arabia, which included ammunition depots and radar systems.
Consequences of Attacks on Global Oil Supply
Following the attacks on Friday that damaged the East-West pipeline in Saudi Arabia, the country may be unable to supply crude oil for export within a few days. This pipeline allows Saudi Arabia to export oil while bypassing the Strait of Hormuz, through which about one-fifth of the world's oil supply passes. According to assessments from buyers and traders, the attack on this pipeline poses a threat to up to 4% of the global oil supply.
Goldman Sachs stated in a note that the recent attack may be more severe than previously thought and could have a serious impact on recent exports from Yanbu amounting to 2 million barrels per day. The bank also predicted that if demand does not change or if oil flows through the Strait of Hormuz increase, several weeks of closure of the East-West pipeline could push Brent oil prices to $130 per barrel.
Traffic of cargo ships in the Strait of Hormuz also decreased to four vessels on Monday, raising concerns about the effects of this route on global oil supply. Meanwhile, the Oman Maritime Security Center reported that the Panama-flagged tanker 'El Gaya' was transferred to the port of Oman due to a fire in its engine room.
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