Oil prices jump after Saudi Arabia shuts East-West pipeline

Saudi Arabia shut down its East-West Pipeline after multiple drone attacks on Thursday, Sept. 10, pushing oil prices sharply higher on Monday as traders weighed the loss of a key crude export route that bypasses the Strait of Hormuz.

Brent crude rose as much as 3.9% to above $108 a barrel, while U.S. West Texas Intermediate futures climbed 3% to around $103 a barrel. The kingdom has given no public indication of the extent of the damage or a timeline for resuming operations, according to CNBC.

The East-West Pipeline runs the width of Saudi Arabia, linking the country's Gulf-side production fields to Red Sea export facilities, and can move up to 7 million barrels of crude per day. It has served as a critical workaround during the U.S.-Iran war, allowing the kingdom to move crude without transiting the Strait of Hormuz, according to Bloomberg.

Iraq's Prime Minister Ali Al-Zaidi ordered an investigation after determining the strikes originated from a site within a region bordering Iran, according to Bloomberg.

Crude held in storage at Yanbu is sufficient to keep exports flowing for roughly five to seven days, after which the market impact would become severe, according to Bloomberg. Crude loaded for export at Yanbu averaged 2.6 million barrels per day over the last seven days, according to CNBC.

"It all boils down to the duration," June Goh, senior oil market analyst at Sparta Commodities SA, told Bloomberg. A prolonged shutdown could force output cuts, Goh said.

Talks between Iran and Gulf Arab nations that had been set for Monday in Oman were scrapped in the wake of the pipeline strike. "In the interests of consensus the regional meeting set for tomorrow in Salalah has been postponed," Oman's Foreign Minister Badr Albusaidi said Sunday in a social media post cited by CNBC.

The pipeline shutdown compounds pressure from several directions. Houthi militants in Yemen struck Saudi energy facilities earlier last week, injuring more than 70 people. A tanker was hit in the Strait of Hormuz on Sunday and caught fire, the United Kingdom Maritime Trade Operations Center reported, as cited by CNBC.

Oil prices had already been climbing before the attack. The International Energy Agency cut its global oil supply and demand forecasts for 2026 last week, warning that stalled diplomatic talks and renewed shipping lane attacks were pushing the market toward a deeper shortfall. Global oil inventories fell by 95 million barrels in August alone, the IEA said. Chevron CEO Mike Wirth said separately that the buffers that had cushioned prices since the war began — including strategic reserve releases — have been exhausted, with price risks remaining to the upside.