Brent Surges Above $108 as Saudi Export Route Faces Fresh Disruption

Brent crude prices climbed above $108/bbl earlier on Monday following renewed escalation in the Middle East, before easing to around $107.22/bbl at the time of reporting. WTI crude was trading at $102.66/bbl.

The latest rally followed reports of a drone attack targeting Saudi Arabia’s East-West Pipeline, raising concerns that the disruption could affect an additional 4% of global oil supply. At the same time, stalled diplomatic efforts have added to uncertainty over the region’s energy flows.

According to sources cited by Reuters, Saudi Arabia’s Yanbu port on the Red Sea currently has enough crude for only around five to seven days of exports, while Yemen’s Houthi forces are reportedly expanding their control over parts of the waterway.

East-West Pipeline Disruption Adds Supply Risk

The East-West Pipeline has the capacity to transport approximately 7 million barrels of crude per day. However, the severity of the reported damage and the expected duration of the shutdown remain unclear.

ING commodity strategists said the impact of the disruption is still uncertain, while noting that substantial volumes of crude continue to move through the Strait of Hormuz.

Despite the latest price surge, ING maintained its base-case forecast of $80/bbl for Brent in the fourth quarter, reflecting its view that the current situation remains fluid and that significant oil volumes are still flowing through Hormuz.

Diplomatic Efforts Face Further Setback

Geopolitical uncertainty has also increased following comments from US President Donald Trump, who said the United States could potentially remain in Iran and retain control of its oil, comparing the possibility with the situation in Venezuela.

Trump also said gasoline prices could fall sharply once the conflict with Iran ends. However, prospects for a near-term diplomatic breakthrough remain uncertain after the cancellation of a meeting that had been scheduled to take place in Oman.

With the Saudi pipeline disruption, risks around Red Sea shipping and continued uncertainty surrounding Hormuz, oil markets remain highly sensitive to developments in the Middle East.

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