Oil Price Today Rises Above $107 After Saudi Pipeline Closure Deepens Supply Fears

Key Takeaways

• Brent crude rose approximately 2.9% to $107.66 per barrel, while WTI advanced 2.4% to $102.48 as Middle East supply risks intensified.
• Saudi Arabia has temporarily closed its East-West oil pipeline after drone attacks damaged pumping infrastructure.
• The pipeline can transport as much as 7 million barrels per day and has become Saudi Arabia’s main alternative to the disrupted Strait of Hormuz.
• Risks are also increasing around the Bab el-Mandeb Strait after Houthi forces captured the strategically located island of Perim.
• Shrinking global inventories, disrupted Gulf exports and delayed diplomatic talks could keep oil prices above $100.

The oil price today rose above $107 per barrel as the closure of Saudi Arabia’s East-West pipeline removed one of the most important alternatives to the disrupted Strait of Hormuz.

Front-month Brent crude futures climbed 2.9% to approximately $107.66 per barrel, while US West Texas Intermediate gained 2.4% to $102.48. Both benchmarks initially rose more than 3% as trading resumed, extending an advance of approximately 8% from the previous week.

The latest increase followed drone attacks on the Saudi pipeline, new violence affecting vessels around the Persian Gulf and growing Houthi control near the southern entrance to the Red Sea. The combination threatens oil flows through three strategically important routes at the same time.

Oil Price Today: Brent and WTI Extend Their Rally

Oil prices returned above $100 last week as attacks on shipping and energy infrastructure intensified. The Saudi pipeline closure has increased the risk premium because it affects the route Riyadh was using to bypass the Strait of Hormuz.

The duration of the shutdown is now the central question for the market. A rapid restart could reduce the immediate supply premium, while repairs lasting several weeks could push Brent back toward its recent highs.

Why the Saudi East-West Pipeline Matters

Saudi Arabia’s East-West pipeline, also known as Petroline, runs approximately 1,200 kilometers from oil-producing areas in the east of the country to the Red Sea port of Yanbu.

The pipeline has a design capacity of approximately 7 million barrels per day. Recent flows were estimated at between 4 million and 5 million barrels per day, representing as much as 4% of global oil supply.

Its strategic importance increased after Iran restricted shipping through the Strait of Hormuz. Instead of loading crude at Gulf export terminals, Saudi Arabia could transport oil westward and ship it from Yanbu without requiring tankers to enter the strait.

By early June, Saudi crude exports from the Red Sea port had more than doubled to over 5 million barrels per day, according to data cited by the Associated Press.

Saudi authorities described the latest pipeline closure as a precautionary measure after drones damaged infrastructure along the route. The kingdom said the aircraft came from Iraq, while Iraqi authorities launched an investigation and removed a regional military commander after determining that the attacks originated from southern Maysan province.

The available repair timeline remains uncertain. Estimates range from several days to as long as six weeks, depending on the severity of the damage to pumping stations and supporting infrastructure. Saudi Arabia can temporarily use stored crude at Yanbu, but those reserves may not be sufficient if the shutdown becomes prolonged.

Three Oil Supply Routes Are Now Under Pressure

The pipeline attack is particularly disruptive because other Middle East export routes are already facing severe restrictions.

Strait of Hormuz

The Strait of Hormuz normally carries oil and liquefied natural gas exports from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Qatar. Iranian restrictions and repeated attacks on commercial shipping have reduced traffic through the waterway.

An Iranian commercial vessel was struck near Qeshm Island on Sunday, leaving one person dead and three injured, according to state media. A separate maritime-security report said a vessel was hit by a projectile while passing through the strait, although it was unclear whether the reports referred to the same incident.

East-West Pipeline

The Saudi pipeline was the main overland option for moving eastern crude production to a port outside the Persian Gulf. Its closure reduces Riyadh’s ability to maintain exports while avoiding Hormuz.

Bab el-Mandeb Strait

Risk is also increasing near Bab el-Mandeb, the narrow waterway connecting the Red Sea with the Gulf of Aden.

Iran-backed Houthi forces captured Perim, also known as Mayun, an island positioned inside the strait. The route has recently handled approximately 4% to 5% of global oil supply and became more important as Saudi Arabia redirected exports toward the Red Sea.

Shipping through Bab el-Mandeb had already fallen about 60% following earlier attacks. Renewed Houthi activity could force additional vessels to travel around southern Africa, increasing delivery times, insurance premiums and freight costs.

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Diplomatic Setback Adds to the Oil Risk Premium

A planned meeting between Iran and Gulf countries in Oman was postponed as regional governments failed to reach sufficient consensus over proposals for managing shipping through the Strait of Hormuz.

The meeting had been viewed as a possible step toward reducing attacks and restoring more predictable energy flows. Its postponement removed one potential source of near-term relief for the oil market.

Saudi Arabia reportedly requested changes to an emerging Iran-Oman proposal because of concerns about its long-term implications for other Gulf Cooperation Council countries. Oman later said the discussions had been postponed in the interests of consensus. The Associated Press reported that no new date had been announced.

Without diplomatic progress or a rapid pipeline restart, traders may continue adding a geopolitical premium to Brent and WTI prices.

IEA Warns That Global Oil Buffers Are Shrinking

The International Energy Agency’s September report indicates that the oil market was already under severe strain before the latest pipeline closure.

Global oil production fell by 1.6 million barrels per day in August to 100.1 million barrels per day. More than 10 million barrels per day of Gulf production remained offline because of security risks.

The IEA expects total global oil supply to decline by 5.7 million barrels per day in 2026 to an average of 100.7 million barrels per day. It no longer expects Gulf production to recover fully until 2027.

Inventories have absorbed part of the supply loss, but the buffer is shrinking rapidly. Observed global oil stocks declined by 95 million barrels in August, bringing the cumulative draw since February to 507 million barrels. That is equivalent to an average decline of 2.8 million barrels per day.

The agency also estimated that Gulf oil exports averaged approximately 13 million barrels per day in August, almost half their pre-war level. Refined-product and liquefied petroleum gas exports remained about 3.7 million barrels per day below February levels.

Diesel supply is particularly tight. US diesel prices briefly exceeded the equivalent of $200 per barrel in early September, almost double pre-war levels. Global refinery margins have reached records in parts of the Atlantic Basin, according to the IEA’s September Oil Market Report.

Could Brent Crude Rise Toward $120?

Brent’s immediate resistance is located between $109 and $110 per barrel. A sustained break above this area could return the September 9 physical-market high near $113.48 to focus.

Beyond that level, approximately $119.50 represents an important March high. Brent could approach that area if the East-West pipeline remains closed for several weeks or additional attacks disrupt Red Sea exports.

The principal bullish catalysts include:

• Evidence that pipeline repairs will take several weeks
• Further Houthi attacks on Saudi oil infrastructure
• Restrictions on shipping through Bab el-Mandeb
• Additional vessel attacks in the Strait of Hormuz
• A prolonged decline in global crude inventories
• Failed negotiations between Iran, the United States and Gulf countries

Brent could retreat toward $103 to $105 if Saudi Arabia restores the pipeline quickly. A successful diplomatic initiative or evidence of improved shipping through Hormuz could bring the $100 threshold back into focus.

For WTI, immediate resistance is located around $103 to $105. A break above that zone could expose $108 and $110. Initial support appears near $100, followed by approximately $97 and $95.

Higher Oil Prices Increase Fed Rate-Hike Pressure

The oil rally is also affecting global interest-rate expectations.

US headline inflation rose 0.4% in August, partly because gasoline prices increased 3.9%. Producer prices climbed 5.4% from a year earlier, with energy costs rising sharply.

Markets now assign nearly a 90% probability to a 25-basis-point Federal Reserve rate hike at its September 16 meeting. Goldman Sachs changed its forecast from no increase to a quarter-point hike, citing higher oil prices and the Fed’s potential reluctance to surprise a market already positioned for tightening.

Higher borrowing costs could eventually weaken economic activity and reduce oil demand. In the near term, however, monetary tightening cannot immediately replace lost physical barrels or reopen shipping routes.

The resulting policy challenge is increasingly difficult. Central banks may need to respond to higher inflation even as expensive fuel, transportation and borrowing costs weigh on consumers and businesses.

What Could Reverse the Oil Rally?

Despite the supply risks, several factors could prevent Brent from sustaining a move toward $120.

The IEA expects global demand to decline by 2.5 million barrels per day in 2026 as high fuel prices reduce consumption, particularly for diesel and petrochemical feedstocks. The projected contraction was revised 940,000 barrels per day lower than the agency’s previous forecast.

China has also reduced imports at times and used strategic inventories to manage the energy shock. Additional strategic-reserve releases from major consuming countries could temporarily increase available supply.

A prolonged period above $100 may accelerate demand destruction, encourage substitution and raise production outside the Gulf. These adjustments take time, but they could eventually offset part of the geopolitical premium.

Oil Price Outlook

The near-term oil outlook remains bullish while Brent holds above $100 and the Saudi East-West pipeline remains offline.

A rapid restoration of the pipeline could pull Brent back toward $103 or $100. If the shutdown lasts several weeks and pressure around Hormuz and Bab el-Mandeb continues, the market could test $110, $113.50 and potentially $119.50.

The latest rally is not being driven solely by fears of a future shortage. Gulf exports are already significantly below pre-war levels, inventories have fallen by more than 500 million barrels since February and refined-product markets are showing acute supply stress.

Until Saudi Arabia restores its primary bypass route or regional diplomacy produces a credible shipping agreement, oil prices are likely to retain a substantial geopolitical risk premium.