Brent crude climbed toward $108 a barrel on Monday, reaching a four-month high after gaining more than 9% last week, as the shutdown of Saudi Arabia’s East-West oil pipeline removed a critical route used to bypass disruptions in the Strait of Hormuz. Brent was up about 3% at $107.81 in early trading.
Saudi Arabia temporarily shut the East-West pipeline after drone attacks damaged infrastructure along the route. Saudi authorities said the pipeline was closed as a precaution while technical teams assess its safety, with no timetable announced for a restart.
The shutdown has added pressure to an oil market already dealing with sharply constrained tanker traffic through the Strait of Hormuz amid the U.S.-Iran conflict.
Key Route Around Hormuz Goes Offline
The 1,200-kilometer East-West pipeline, also known as Petroline, carries crude from Saudi Arabia’s eastern production areas across the Arabian Peninsula to export facilities at Yanbu on the Red Sea.
Its strategic importance has increased substantially during the conflict because it allows Saudi crude to reach international markets without passing through the Strait of Hormuz. Saudi Arabia had been rerouting about 5 million barrels per day through the system, according to Saudi reporting.
The pipeline has a maximum capacity of about 7 million barrels per day. Saudi Aramco said earlier this year that it had ramped the system to that level during the first quarter as part of its response to shipping constraints in Hormuz.
Reuters reported that the attacks originated in Iraq, according to both Saudi and Iraqi authorities. Riyadh said the strikes caused injuries and material damage.
Hormuz Talks Postponed
Diplomatic efforts to ease pressure on regional shipping also suffered a setback.
A meeting scheduled for Monday between Iran and Gulf Arab states to discuss maritime traffic through the Strait of Hormuz was postponed, with Oman saying additional time was needed to build consensus among participants.
The proposed discussions were expected to address a temporary arrangement for shipping through Hormuz, where tanker traffic has fallen sharply since the escalation of the conflict.
The combination of the delayed talks and the Saudi pipeline shutdown means that both the principal Gulf export corridor and one of its most important alternatives remain under pressure.
Red Sea Route Faces Additional Risks
Concerns are also increasing around the other end of the Saudi pipeline.
Iran-aligned Houthi forces have expanded their presence around the Bab el-Mandeb Strait, the narrow waterway connecting the Red Sea with the Gulf of Aden. The developments have increased shipping risks around another route used to move Middle Eastern energy supplies to international markets.
The pressure on multiple transportation corridors is also raising shipping costs. Reuters reported Monday that tanker rates had reached record levels while bunker fuel supplies were becoming increasingly constrained.
The latest rise takes Brent back above $107 after the benchmark returned above $100 earlier this month. The rally is increasingly being driven not only by risks to oil production itself, but also by the availability and cost of the infrastructure needed to move crude from the Middle East to global markets.
