Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Brent crude prices could face renewed upward pressure when markets open on Monday after attacks forced Saudi Arabia to shut its East-West pipeline, while developments in Yemen added to concerns over Red Sea oil shipments.
Brent settled at $104.60 per barrel on Friday, down 2.8% for the session after rising above $109 on Thursday. The full implications of Saudi Arabia’s pipeline shutdown could not be reflected in the benchmark prices as the confirmation came late.
Goldman Sachs has warned that Brent crude could rise to as much as $120 per barrel if attacks on vessels in the Middle East intensify and cause further disruption to regional oil shipments. The projection represents an upside-risk scenario rather than the bank’s base-case forecast.
Saudi Arabia has used the East-West pipeline to reroute about 4 million barrels per day – or roughly 4% of global oil supply – to the Red Sea port of Yanbu, bypassing the Strait of Hormuz, Reuters reported.
Saudi authorities have not disclosed how long the pipeline will remain out of service. Industry sources gave Reuters varying estimates, with one saying repairs could take five to six weeks and another suggesting that partial operations could resume sooner while repairs continued.
Yanbu has enough oil in storage to maintain exports for only five to seven days, according to three industry sources cited by Reuters. Saudi Arabia also holds stocks at Egypt’s Ain Sukhna and Sidi Kerir ports that could supply customers for several more days.
The pipeline disruption comes as Houthi fighters seized an island at the mouth of the Red Sea after threatening Saudi oil shipments, adding to concerns over the security of regional supply routes.
The International Energy Agency sharply lowered its global supply outlook and now expects world oil supply to fall by 5.7 million barrels per day in 2026 to average 100.7 million bpd, according to the Kamco Invest report. This represented a further downward revision of 1.3 million bpd from the IEA’s previous forecast.
The agency also increased its estimated contraction in global oil demand for 2026 by 940,000 bpd, taking the expected decline to 2.5 million bpd.
Kamco Invest said observed global inventories had fallen by more than 500 million barrels since the regional conflict began. Inventories declined by 95 million barrels in August alone, leaving the global refining system stretched and vulnerable to further tightening.
Prolonged disruption to Middle East production and export infrastructure could, therefore, keep oil prices elevated for longer than previously anticipated, even as high fuel costs begin to weigh on global demand.
