Crude Oil Price Today: Crude oil prices jumped sharply on Monday after Saudi Arabia shut its East-West oil pipeline following attacks, adding to concerns over the availability of global supplies. Brent crude rose as much as 3.6 per cent to $109.30 a barrel, while US West Texas Intermediate (WTI) crude traded around $103 a barrel.
Brent later remained above the $107-a-barrel mark as markets assessed the latest disruption to Saudi Arabia’s oil infrastructure and the broader risks to crude shipments from the Middle East.
According to foreign media, Saudi Arabia said after Friday’s market close that it had halted the East-West pipeline as a precaution following the attacks. The country has not yet provided a timeline for when the pipeline will resume operations at normal capacity.
The pipeline is a crucial alternative route for Saudi crude as it allows oil to be transported towards the Red Sea without passing through the Strait of Hormuz. A report citing regional officials said the route could remain largely unavailable for several weeks.
Why are crude oil prices rising?
The latest development has added another layer of uncertainty to an already disrupted oil market. Around 7 million barrels per day of Saudi crude had been allocated to the Red Sea route, providing an alternative to shipments through the Persian Gulf.
Oil flows through the Gulf have already come under pressure amid the conflict involving Iran and the reported blockade of exports from Gulf countries. Any prolonged disruption to alternative routes could therefore put further pressure on available supplies.
The market is also closely tracking developments around the Strait of Hormuz, a critical shipping route for global energy trade.
A meeting involving Iran and Gulf countries that was scheduled for Monday has been delayed. The talks were expected to explore the possibility of a temporary shipping arrangement through the Strait of Hormuz. Bahrain opted out of the meeting, while Saudi Arabia also had reservations about the discussions.
Bab el-Mandeb another concern
Apart from the Strait of Hormuz, traders are keeping a close watch on the Bab el-Mandeb Strait, another important route for oil shipments.
Advances by Houthi forces towards the region have raised fresh concerns over the security of vessels passing through the waterway. Any disruption at Bab el-Mandeb could further complicate the movement of crude and other energy products.
The combination of supply disruptions and risks around major shipping routes has pushed crude prices higher. Brent had already moved above $104 a barrel before extending its gains towards $110.
Saudi output, China demand add to concerns
Supply worries are also being amplified by developments on the production and inventory side.
Saudi Arabia’s oil output has reportedly fallen to its lowest level since 1990. At the same time, declining crude inventories in China have led the world’s largest oil importer to step up purchases, including higher orders in August.
In the US, the Strategic Petroleum Reserve (SPR) remains close to historically low levels. This means the market has less of a cushion to fall back on if supply disruptions persist or worsen.
For crude traders, the immediate focus is now on how long the Saudi pipeline remains shut and whether shipping through key Middle East routes can return to normal.
A prolonged disruption could keep Brent prices elevated and add to inflationary pressures globally. For oil-importing countries such as India, a sustained rise in crude prices could also become a concern for inflation, trade balances and financial markets.
