Oil prices moved mixed amid pipeline closure in Saudi Arabia — CNBC
Oil prices moved in different directions during trading on Friday amid the closure of a key pipeline in Saudi Arabia and new strikes on the border with Yemen. According to CNBC Top News, U.S. WTI crude futures rose by $1.14 to $103.05 per barrel. At the same time, November Brent futures, the international benchmark, fell by 18 cents to $104.64 per barrel.
Since the start of the week, WTI has gained 3%, while Brent has remained unchanged overall. Market participants assessed the risks of new supply disruptions in the Middle East and reports of alternative routes for Saudi oil exports.
Strikes on the border
On Thursday, Saudi Arabia and Yemen’s Houthis, whom CNBC describes as backed by Iran, exchanged new cross-border strikes. This heightened concerns over further disruptions to energy supplies in the region, which, according to the outlet, have already been under pressure following the U.S. and Israeli attack on Iran in February.
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At the same time, reports that Saudi Arabia had found alternative ways to deliver part of its oil to Asian buyers via Oman eased concerns about more serious supply disruptions. The key pipeline was closed after Houthi attacks.
Pipeline restoration
XS.com business development manager Simon-Peter Masabni said that the latest decline in oil prices reflects a partial reduction in the geopolitical risk premium rather than a fundamental shift in the market. According to him, improved logistics for Saudi exports reduced estimates of the volumes of supplies that could be at risk.
Masabni noted that traders are particularly sensitive to developments around the Strait of Hormuz, export routes and oil terminals. The pace of restoration of Saudi Arabia’s East-West pipeline will also be an important factor. In the analyst’s view, oil prices in the near term will depend more on geopolitical events than on traditional supply-and-demand indicators.
