Saudi East-West Pipeline shut down after drone attack

Key artery capable of moving up to 7 million barrels a day

Brent, WTI surge nearly 5% during trading before paring gains

Trump signals Iran talks, trimming rally

A tanker carrying petroleum products sits anchored in the Strait of Hormuz off Bandar Abbas, Iran, on Aug. 10. (Photo not directly related to article) [Getty Images]
A tanker carrying petroleum products sits anchored in the Strait of Hormuz off Bandar Abbas, Iran, on Aug. 10. (Photo not directly related to article) [Getty Images]

Global oil prices surged again after a drone strike shut down Saudi Arabia's key pipeline — the main alternative route for crude exports that bypasses the Strait of Hormuz. Brent crude climbed above $105 a barrel, while West Texas Intermediate crossed the $101 mark.

November-delivery Brent crude futures closed up 1.02 percent at $105.68 a barrel on the London ICE Futures Exchange on Monday (local time).

October-delivery WTI futures also settled 1.34 percent higher at $101.39 a barrel on the New York Mercantile Exchange.

Both benchmarks soared nearly 5 percent during trading at one point. The spike reflected deepening supply anxiety as disruptions to crude shipments through the Strait of Hormuz — already strained by Iranian threats — were compounded by the shutdown of Saudi Arabia's key overland bypass route.

Prices pared a significant portion of their gains, however, after US President Donald Trump signaled the possibility of negotiations with Iran. Trump said on Truth Social that Iran "wants to make a deal quickly, and desperately."

Markets are focused on the shutdown of Saudi Arabia's East-West Pipeline. The artery carries crude produced in Saudi Arabia's eastern oil fields across the Arabian Peninsula to the Red Sea port of Yanbu on the western coast — allowing the kingdom to export oil without passing through the Strait of Hormuz, where Iranian threats have been a persistent concern.

Stretching roughly 1,200 kilometers, the pipeline can transport up to 7 million barrels of crude per day. Saudi Arabia has repeatedly relied on it to expand Red Sea oil exports whenever geopolitical risks around the Strait of Hormuz have escalated.

The East-West Pipeline was taken offline after a drone strike on Friday. The Associated Press reported that repair work is expected to keep the pipeline fully or partially shut for several weeks.

With tensions around the Strait of Hormuz persisting and the alternative route now also disrupted, supply uncertainty in global oil markets looks set to continue for now.


sjy@heraldcorp.com