Brent crude climbed above $108 a barrel on Tuesday as traders grew increasingly uncertain about when Saudi Arabia's East-West Pipeline would reopen, with fresh Houthi attacks on the kingdom and suspended oil loadings at its Red Sea export terminal adding to supply fears.
By 1:00 p.m. ET, Brent futures had climbed 3% to $108.88 per barrel, with U.S. West Texas Intermediate up 4.7% at $106.12. A close at those levels would mark the highest settlement for either contract in close to four months, according to Reuters. Prices have risen around 20% this month as fighting in the Persian Gulf has escalated.
According to shipping industry sources who spoke with Reuters, crude loadings at the Yanbu terminal on Saudi Arabia's Red Sea coast had been halted as of Tuesday. Separately, sources told Reuters that Saudi officials had notified European buyers that certain crude shipments scheduled for late September would not proceed.
Saudi Arabia shut down the East-West Pipeline after drone attacks originating from Iraq struck it last week, forcing the kingdom to halt the export route it had been using to bypass the Strait of Hormuz during the U.S.-Iran war. The pipeline can move up to 7 million barrels per day. Saudi officials have described the closure as a precautionary measure but have not provided a damage assessment or a timeline for resuming operations. U.K. authorities fear the pipeline may remain mostly shut for six weeks, according to Bloomberg.
Iran-backed Houthi militants in Yemen carried out additional strikes on Saudi Arabia on Monday. According to a spokesperson for the Saudi-led military coalition in Yemen, the group fired drones and ballistic missiles targeting the cities of Khamis Mushait, Abha, and Taif. According to Reuters, the Houthis claimed to have struck a military air base in Khamis Mushait, with their stated targets including hangars, radar installations, runway infrastructure, and stores of ammunition.
A separate supply disruption also weighed on markets. Libya's National Oil Corporation said it suspended operations at three oil fields after members of the Petroleum Facilities Guard shut a valve on a crude export pipeline. The Guard threatened to broaden the action unless its grievances were addressed, while the NOC cautioned that a force majeure declaration could follow if more fields are compelled to stop output.
At least two tankers have come under attack in the Strait of Hormuz since Saturday, according to the United Kingdom Maritime Trade Operations Centre. U.S. Central Command pushed back on an Iranian Revolutionary Guard assertion that the El Gaia, a Panamanian-flagged tanker, had hit a naval mine, saying the vessel was instead hit by an Iranian missile last month and left unable to operate.
Yulia Zhestkova Grigsby, senior commodity strategist at Goldman Sachs, said in a Monday note that the attacks on oil infrastructure "increase the probability of our price upside scenario, where Brent exceeds $120."
U.S. diesel futures rose more than 5.9% on Tuesday, putting them on track for a record close. The national average price for diesel reached $6.23 per gallon, a record, according to The Hill, citing AAA data.