Supply Disruption Fears in Saudi Arabia, Libya Hike Crude Oil Prices by $3

By Adedapo Adesanya

Crude oil prices traded $3 higher to a four-month high on Tuesday amid deepening supply concerns in major oil-producing countries.

Brent chalked up $3.07 or 2.9 per cent to sell for $108.75 a barrel, while US West Texas Intermediate (WTI) soared by $4.44 or 4.38 per cent to $105.83 a barrel.

Aramco, the Saudi Arabian state oil company, has cancelled or delayed crude deliveries to European refiners after the shutdown of the kingdom’s East-West pipeline cut into one of its remaining routes around the Strait of Hormuz.

At least three European refiners have had late-September cargoes cancelled or pushed as far out as November, according to market sources cited by Argus. Two more expect notices covering September supplies.

The 7-million-barrel-per-day East-West pipeline has been offline since a September 10 attack. The port of Yanbu has taken ​on outsized importance for global supply since the US-Israeli war on Iran caused the closure of the Strait of Hormuz, a critical waterway that was the conduit for ​one-fifth of the world’s oil and liquefied natural gas supplies.

Commodity vessel traffic through the Strait of Hormuz dropped to four on Monday, down from 10 a day earlier, preliminary data from Kpler showed on Tuesday.

Supply concerns intensified after Houthi forces launched fresh attacks on Saudi Arabia on Monday, while ​Gulf Arab states postponed planned discussions with Iran.

Reuters reported that Saudi ​Arabia could exhaust crude available for export within ⁠days unless the East-West Pipeline resumes operations, as the pipeline strike threatens up to 4 per cent of global oil supply.

In Libya, separate from the Iran conflict, the National Oil Corporation (NOC) said operations at three ‌oil fields ⁠were suspended after protesting members of the Petroleum Facilities Guard shut a valve on the Hamada-Zawiya crude export pipeline.

The Guard warned the shutdown could be expanded if its demands are not met. The NOC said it may declare force majeure if the valve remains closed or if additional fields are forced to halt production.

The latest disruption lands just as Libya is trying to push production much higher. Output has climbed to roughly 1.4 million barrels per day, its highest level in more than a decade. NOC is targeting 1.6 million barrels per day by the end of 2026 and 2 million barrels per day by the early 2030s.