Global oil prices have risen sharply after crude loading at the Saudi export hub of Yanbu was halted and some shipments to Europe were canceled. Brent rose 2.9% to $108.75 a barrel, while U.S. WTI rose 4.38% to $105.83, Reuters reported.
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Both grades closed at their highest since May 19. Traders’ concerns were heightened after reports that Saudi Arabia had canceled some crude deliveries to European buyers scheduled for late September.
The key problem was the 1,200-kilometer East-West pipeline, which Saudi Arabia used to transport oil to the Red Sea, bypassing the Strait of Hormuz. This route was closed after a Houthi attack.
Up to 4% of global supplies at risk
The pipeline’s importance has skyrocketed after normal shipping through the Strait of Hormuz effectively stopped. According to preliminary data from Kpler, only four cargo ships passed through it on Monday, down from 10 the day before.
Buyers and traders estimate that if the East-West pipeline does not start operating soon, Saudi Arabia could run out of exportable oil within days. Disruptions to the route pose risks to volumes equivalent to 4% of global supply.
The timing of repairs remains uncertain. According to Goldman Sachs, estimates range from a resumption of operations in the near future to eight weeks. The bank also expects Brent to rise above $120 a barrel if Gulf oil supplies remain disrupted for a long time.
