Key Takeaways
- Oil prices have surged above $108 a barrel following attacks on Saudi Arabia’s east-west pipeline.
- The attacks, confirmed by Iraq, could affect 4% of global oil supply.
- Gas prices have also climbed higher, reflecting ongoing disruptions in the Middle East.
Oil prices have climbed above $108 a barrel after a series of drone attacks from Iraq’s territory forced Saudi Arabia to close its east-west crude pipeline, according to reports.
The closure of the 745-mile pipeline, which typically reroutes about 4 million barrels of oil a day, has raised concerns about potential supply disruptions.
Saudi traders warned that the kingdom would run out of oil stocks for export if the pipeline did not reopen within days, highlighting the immediate impact on global markets.
Gas prices have also seen a significant increase, mirroring the broader trend in energy prices this year, which has been exacerbated by the ongoing US-Israel war with Iran.
The attacks come as the Iran-aligned Houthi forces in Yemen launched several strikes against Saudi Arabia, capturing the strategic island of Perim in the Bab al-Mandab strait on Sunday, further expanding their control of the waterway.
Iraq’s government confirmed the attacks were launched from its territory and ordered an investigation, under mounting pressure to stop militant groups from launching attacks from Iraqi soil.
The US president, Donald Trump, suggested that Tehran was responsible for the attacks, adding to the geopolitical tensions in the region.
Riyadh has increased the use of the east-west pipeline since the start of the war on Iran to bypass the strait of Hormuz, which has been closed by Iran.
With the pipeline out of service, the Red Sea port of Yanbu now has stocks to maintain exports for just five to seven days, underscoring the urgency of reopening the pipeline.
