Brent and WTI crude futures jumped Tuesday after Saudi Arabia's East-West pipeline stayed shut following a drone attack on its pumping stations. US Energy Secretary Chris Wright told CNBC the closure would last only days, even as satellite images point to more extensive damage.
Brent crude futures jumped more than $2.80 to cross back above $108.50 a barrel on Tuesday, nearing Monday's high near $109. US benchmark WTI crude climbed roughly $3.50 to trade above $104.50, as fighting in the region widened pressure on physical crude oil supply.
Pipeline attack cuts a key export route
Saudi Arabia shut its East-West pipeline over the weekend after strikes forced the kingdom to close the line, attributed to the Yemeni Houthi militia and other Iran-backed proxy forces. The pipeline runs 1,200 kilometers from Gulf oil fields to the Red Sea port of Yanbu, letting Saudi Arabia export crude without sending tankers through the Strait of Hormuz.
With a capacity of roughly 7 million barrels per day, the line has become the main driver of the recovery in Gulf oil exports. Flow estimates before the shutdown ranged between 2.6 million and 5 million bpd, a significant share of Saudi Arabia's total exports.
Wright says outage will be brief
Speaking to CNBC at a G20 meeting in Houston, Wright said the pipeline outage "will be measured in days." Saudi Arabia has shifted some crude exports back through the Strait of Hormuz with US military support while the pipeline stays down, Wright said.
Yet satellite imagery appears to show extensive damage to one of the pipeline's pumping stations, and Lipow Oil Associates president Andy Lipow has said repairs could take months. Riyadh has not provided its own damage assessment or said how long the closure will last.
Disruption spreads beyond the pipeline
The Houthis have taken control of several Saudi cities in the past week and have threatened to blockade vessels carrying Saudi oil through the Bab el-Mandeb Strait. Libya's National Oil Corporation also suspended production at two oilfields on Tuesday after militia protests at its production sites.
The widening disruptions have pushed Dated Brent, the benchmark for physical crude, above $130 a barrel, far above futures prices.
Sources: Yahoo Finance, CNBC, Crypto Briefing
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