Saudi pipeline shutdown combined with new Houthi attacks drives oil prices up by over 1%

1. On Tuesday, international oil prices continued to rise as an attack on Saudi Arabia’s energy infrastructure caused the shutdown of the east-west oil pipeline, increasing market concerns over whether shipping risks in the Gulf region can be alleviated. U.S. crude oil rose as much as 1.75% to $103.16 per barrel, while Brent crude oil climbed 1.15% to $107.37 per barrel. Both major benchmarks had risen more than 1% in the previous trading day.2. On Monday, the Iran-backed Yemeni Houthi forces launched missile and drone attacks on the Saudi southern Khamis Mushait Air Base, hitting aircraft hangars, radar systems, runways, and ammunition depots, in retaliation for Saudi airstrikes in Yemen. Meanwhile, Gulf Arab countries postponed previously scheduled talks with Iran, further raising market fears of an escalating Middle East conflict and disruptions to global oil supplies.3. Last Friday, Saudi Arabia was attacked, and Riyadh accused Iran-supported armed groups in Iraq of responsibility, resulting in the interruption of the east-west oil pipeline bypassing the Strait of Hormuz. According to Saudi buyers and traders, unless the pipeline resumes operation, the exportable crude oil may be exhausted within a few days, potentially reducing global oil supply by as much as 4%. As the world’s largest oil exporter, Saudi Arabia has been using this pipeline to transport about 4 million barrels of oil per day to its Red Sea port of Yanbu, accounting for about 4% of global supply.4. Over the past weekend, the number of commodity vessels passing through the Strait of Hormuz dropped from an average of 14 ships per day over the previous 10 days to less than 10 ships. Tim Waterer, chief market analyst at KCM Trade, stated that crude oil traders view each new attack or infrastructure damage as an accumulating supply risk, while remaining highly sensitive to any signs of possible normalization of pipeline or strait shipping. He added that the top concern for traders right now is how long the east-west pipeline disruption will last; any prolonged interruption and supply loss could easily push oil prices even higher.