Oil prices surged Tuesday (local time) amid deepening concerns over crude supply disruptions in Saudi Arabia, Libya and other parts of the Middle East. Pictured is a fuel nozzle at a gas station in Nice, France. [EPA]
Oil prices surged Tuesday (local time) amid deepening concerns over crude supply disruptions in Saudi Arabia, Libya and other parts of the Middle East. Pictured is a fuel nozzle at a gas station in Nice, France. [EPA]

Oil prices climbed to their highest level in about four months on Tuesday (local time) as supply disruption fears spread from Saudi Arabia to Libya.

Brent crude futures for November delivery settled up 2.90 percent at $108.75 a barrel on the London ICE Futures Exchange, while West Texas Intermediate futures for October delivery rose 4.38 percent to close at $105.83 a barrel on the New York Mercantile Exchange. Both benchmarks hit their highest levels since May 19.

The surge reflected compounding supply concerns. In Saudi Arabia, Iran-backed Houthi rebels struck the kingdom's east-west pipeline, forcing its closure and halting crude loading operations at the port of Yanbu. Riyadh had been routing oil through that pipeline to Yanbu and exporting it via the Red Sea after Iran blocked the Strait of Hormuz — a workaround that has now also been disrupted. With that alternative route cut off, Saudi authorities notified some European customers that crude shipments scheduled for delivery later this month would be canceled.

The cancellations drove WTI futures higher than Brent, as analysts expect European refiners to seek alternative supplies, including US crude, to replace the lost Saudi volumes.

Supply concerns deepened further after Libya's state-owned National Oil Corp. announced that three oil fields had been shut down. Members of the Petroleum Facilities Guard, which protects oil infrastructure in Libya, closed valves on some crude export pipelines to press their demand that the force be transferred from the Defense Ministry's authority to the National Oil Corp.

Goldman Sachs said in a report that attacks on oil infrastructure had significantly escalated the level of conflict, and warned that Brent crude could exceed $120 a barrel if Gulf region output remains 4 million barrels per day below pre-war levels through 2027.


kate01@heraldcorp.com