Oil prices remained firmly above $100 a barrel on Tuesday as the shutdown of Saudi Arabia’s East-West pipeline and fresh attacks on the kingdom kept Middle East supply risks at the centre of the market.
Brent crude was trading around $106.70 a barrel, up roughly 1%, while West Texas Intermediate gained about 1.6% to $103. Earlier, Brent reached $108.43 and WTI touched $104.21 before paring gains.
The market remains focused on the East-West pipeline, which allows Saudi crude to bypass the Strait of Hormuz.
The route was shut after drone attacks last week, putting more than 4 million barrels a day of export capacity at risk.
Crude buyers and oil traders fear Saudi Arabia could exhaust stores of crude available for export within days unless flows resume.
The pressure intensified after Iran-backed Houthi forces launched further missile and drone attacks on Saudi Arabia.
Meanwhile, commodity vessel traffic through Hormuz reportedly fell to just four ships on Monday from 10 a day earlier, according to reports citing preliminary Kpler data.
Goldman Sachs said repair estimates for the Saudi pipeline ranged from “very soon” to eight weeks and warned prolonged disruption increased the probability of Brent moving above $120.
Broadly, some market economists forecast prices reach up towards $130 if things don't improve.
The squeeze is already reaching consumers. US diesel prices hit a record $6.27 a gallon on Tuesday, according to AAA, adding another inflationary pressure ahead of this week’s Federal Reserve decision.
