Oil prices edged higher on Tuesday as attacks on Saudi Arabian energy infrastructure left the kingdom's East-West Pipeline offline, deepening concerns that damage to transport routes could take longer to repair. Brent crude futures rose 6 cents to $105.74 a barrel at 1301 GMT after hitting a session high of $108.43, while U.S. West Texas Intermediate (WTI) futures gained 27 cents to $101.66 a barrel, having earlier surged to $104.21.

Market Context

The upward pressure on crude came amid escalating geopolitical tensions in the Middle East. Iran-backed Houthi forces in Yemen launched fresh attacks on Saudi Arabia on Monday, firing dozens of missiles and drones at a military air base in Khamis Mushait. This followed attacks on Friday that disrupted the East-West Pipeline, a critical infrastructure allowing oil exports to bypass the blockaded Strait of Hormuz. The pipeline strike threatens up to 4% of global oil supply, according to market participants.

Analysis

Investors are weighing the severity and duration of the conflict, with supply disruptions acting as the primary driver for volatility. The East-West Pipeline is vital for bypassing the Strait of Hormuz, through which about a fifth of global oil supplies passed before the U.S.-Iran war. Buyers and traders warn that Saudi Arabia could exhaust crude available for export within days unless operations resume. Goldman Sachs noted that the recent attack may be more severe than previously assessed, threatening the remaining 2 million barrels per day of recent Yanbu exports, with repair assessments ranging from 'very soon' to eight weeks.

Key Numbers

- Brent crude futures: Up 6 cents to $105.74/barrel (session high: $108.43)

- WTI futures: Up 27 cents to $101.66/barrel (session high: $104.21)

- Global supply risk: Up to 4% threatened by pipeline outage

- Yanbu export volume at risk: 2 million barrels per day

- Strait of Hormuz traffic: Dropped to 4 vessels on Monday, down from 10 the previous day

- Goldman Sachs price scenario: Potential for Brent to rise above $120/barrel if Gulf output remains 4 mb/d below pre-war levels in 2027

What to Watch

Traders should monitor repair timelines for the East-West Pipeline, which Goldman Sachs estimates could take up to eight weeks. Diplomatic developments are also critical; prices eased from earlier highs after Egyptian President Abdel Fattah al-Sisi and Saudi Crown Prince Mohammed bin Salman stressed the need to ensure freedom and security of navigation in the Bab el-Mandeb Strait and the Red Sea. Additionally, Gulf Arab states have postponed planned discussions with Iran, signaling continued diplomatic friction. Commodity vessel traffic data from Kpler remains a key indicator for near-term supply constraints.