Oil prices edged higher on Tuesday as traders weighed the risk of further disruptions to Middle East supplies after a key Saudi Arabian pipeline was forced offline.
Brent crude rose to around $107 a barrel, while West Texas Intermediate was near $103. The gains came after the market absorbed the impact of attacks that shut Saudi Arabia's East-West pipeline, a critical alternative route for moving crude without using the Strait of Hormuz.
The 1,200-kilometre East-West pipeline, also known as Petroline, connects Saudi Arabia's oil-producing region in the east with the Red Sea port of Yanbu. It can move several million barrels of crude a day, allowing Riyadh to bypass Hormuz. The route has become particularly important as traffic through the strategic waterway has been severely disrupted by the US-Iran conflict.
Saudi Pipeline Outage Adds To Supply Worries
The pipeline was shut after attacks last week, with Saudi Arabia blaming drones launched by Iranian-backed militants in Iraq. Reports now suggest that repairs could take three to five weeks, although part of the pipeline could resume operations before repairs are fully completed.
That has left traders focused on how much Saudi crude can continue to move through alternative routes. Yanbu is currently drawing on inventories to maintain exports, increasing concerns that prolonged disruption could tighten global supplies further.
US Energy Secretary Chris Wright, however, said he expected the pipeline to return to service “very soon”, adding some uncertainty over the duration of the disruption.
Diplomatic efforts to ease the crisis have also come under pressure. Gulf states postponed talks with Iran that were expected to discuss a temporary shipping route through the Strait of Hormuz. The delay has added to concerns that disruptions to one of the world's most important oil chokepoints could persist.
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