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CRUDE OIL SURPASSES $106 AMID NEW SUPPLY DISRUPTIONS IN LIBYA AND SAUDI ARABIA
(MENAFN- Your Mind Media ) Crude oil prices are posting strong gains during Tu’sday’s September 15 session, driven by a renewed escalation in concerns over global crude supply. Brent crude futures climbed toward the $109-per-barrel area. At the same time, West Texas Intermediate (WTI) surpassed $106 per barrel, keeping the energy market under significant upward pressure after several weeks dominated by geopolitical tensions and production disruptions.
One of the main catalysts during the session came from Libya, after the state-owned National Oil Corporation announced it had suspended operations at three oil fields. The disruption followed new blockades involving strategic production and transportation facilities, once again raising doubts about the’country’s ability to maintain stable crude oil exports.
The situation could deteriorate further if the blockades cont’nue. Libya’s state oil company warned that it could declare force majeure, a measure that would allow it to suspend certain contractual obligations under extraordinary circumstances. Libya has suffered repeated production disruptions in recent years due to political disputes, technical problems, and conflicts over control of its energy infrastructure.
However, the marke’’s main focus remains on Saudi Arabia. Recent attacks by Ye’en’s Houthis damaged the co’ntry’s strategic East-West oil pipeline, an approximately 1,200-kilometer-long piece of infrastructure that transports crude from production areas in eastern Saudi Arabia to facilities located on the Red Sea.
Initial estimates suggest that repairs could keep part of the infrastructure out of service for approximately three to five weeks. Before the attack, the pipeline transported between 2.6 million and 4 million barrels per day. Therefore, a prolonged disruption at the upper end of that range could put at risk a volume equivalent to nearly 4% of global oil supply, significantly increasing price sensitivity to any additional disruptions.
The problem has grown even more significant because this infrastructure has become an alternative to the Strait of Hormuz. Before the escalation of the conflict between the United States and Iran, approximately one-fifth of ’he world’s crude oil consumption passed through this maritime route, making it one of the most strategically important chokepoints for international energy trade.
The reduction in flows through Hormuz had increased dependence on alternative routes, particularly Saudi infrastructure leading to the Red Sea. As a result, damage to the East-West pipeline temporarily reduces one of the main options to bypass the strait, increasing the risk that any additional disruption could tighten physical supply conditions in the international market and keep Brent and WTI above the $100-per-barrel threshold.
At the same time, the prospects for diplomatic de-escalation appear to have weakened. The postponement of planned talks in Oman between Iran and Gulf countries has reduced expectations for a rapid resolution of regional tensions. Until clear signs of negotiations emerge, the market will likely continue to price a substantial geopolitical risk premium into oil prices.
One of the main catalysts during the session came from Libya, after the state-owned National Oil Corporation announced it had suspended operations at three oil fields. The disruption followed new blockades involving strategic production and transportation facilities, once again raising doubts about the’country’s ability to maintain stable crude oil exports.
The situation could deteriorate further if the blockades cont’nue. Libya’s state oil company warned that it could declare force majeure, a measure that would allow it to suspend certain contractual obligations under extraordinary circumstances. Libya has suffered repeated production disruptions in recent years due to political disputes, technical problems, and conflicts over control of its energy infrastructure.
However, the marke’’s main focus remains on Saudi Arabia. Recent attacks by Ye’en’s Houthis damaged the co’ntry’s strategic East-West oil pipeline, an approximately 1,200-kilometer-long piece of infrastructure that transports crude from production areas in eastern Saudi Arabia to facilities located on the Red Sea.
Initial estimates suggest that repairs could keep part of the infrastructure out of service for approximately three to five weeks. Before the attack, the pipeline transported between 2.6 million and 4 million barrels per day. Therefore, a prolonged disruption at the upper end of that range could put at risk a volume equivalent to nearly 4% of global oil supply, significantly increasing price sensitivity to any additional disruptions.
The problem has grown even more significant because this infrastructure has become an alternative to the Strait of Hormuz. Before the escalation of the conflict between the United States and Iran, approximately one-fifth of ’he world’s crude oil consumption passed through this maritime route, making it one of the most strategically important chokepoints for international energy trade.
The reduction in flows through Hormuz had increased dependence on alternative routes, particularly Saudi infrastructure leading to the Red Sea. As a result, damage to the East-West pipeline temporarily reduces one of the main options to bypass the strait, increasing the risk that any additional disruption could tighten physical supply conditions in the international market and keep Brent and WTI above the $100-per-barrel threshold.
At the same time, the prospects for diplomatic de-escalation appear to have weakened. The postponement of planned talks in Oman between Iran and Gulf countries has reduced expectations for a rapid resolution of regional tensions. Until clear signs of negotiations emerge, the market will likely continue to price a substantial geopolitical risk premium into oil prices.
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