Oil prices rose sharply on Tuesday as the suspension of crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu and the cancellation of some Saudi cargoes to Europe increased concerns that disruptions to a critical oil-export route could last for weeks. Brent crude futures rose $3.07, or 2.9%, to settle at $108.75 per barrel, while U.S. West Texas Intermediate (WTI) crude gained $4.44, or 4.38%, to settle at $105.83 per barrel. Both benchmarks closed at their highest levels since May 19.<\/p>\n\n\n\n
WTI outpaced Brent as concerns about Saudi Arabia’s ability to export crude pushed traders toward U.S. oil as an alternative source of supply. The suspension of loadings at Yanbu followed Friday’s attack on Saudi Arabia’s East-West Pipeline, which had become a critical route for moving crude from the country’s eastern oil fields to the Red Sea after the Strait of Hormuz was effectively closed.<\/p>\n\n\n\n
Saudi Arabia had been relying on the approximately 1,200-kilometer East-West Pipeline to bypass the Strait of Hormuz and continue exporting crude through the Red Sea. With the pipeline shut, shipping sources said Yanbu loadings have now been suspended, while some late-September crude deliveries to European customers have reportedly been canceled.<\/p>\n\n\n\n
The potential duration of the outage remains uncertain. Goldman Sachs said repair estimates range from very soon to as long as eight weeks, while U.S. Energy Secretary Chris Wright said Tuesday that oil should begin flowing through the pipeline within days. Saudi Arabia could potentially exhaust crude available for export within days if the pipeline remains offline.<\/p>\n\n\n\n
The disruption comes as traffic through the Strait of Hormuz remains extremely limited. Preliminary Kpler data showed only four commodity vessels passed through the strait on Monday, down from 10 the previous day. Before the conflict began, the waterway carried approximately one-fifth of global oil and LNG supplies.<\/p>\n\n\n\n
Additional supply concerns emerged from Libya, where operations at three oil fields were suspended after members of the Petroleum Facilities Guard shut a valve on the Hamada-Zawiya crude export pipeline. Libya’s National Oil Corporation said it could declare force majeure if the disruption continues or spreads to additional fields.<\/p>\n\n\n\n
Refined-product markets are also facing significant pressure. Continued attacks on energy infrastructure in Russia and Ukraine pushed U.S. diesel futures and diesel crack spreads to record closing levels. Half of Russia’s six largest diesel-producing refineries have reportedly significantly reduced or halted production in September because of damage from drone attacks.<\/p>\n\n\n\n