Brent Crude Hits $108 as Saudi East-West Pipeline Shut for Weeks After Drone Strike

Brent crude surged to $108 per barrel on Monday before easing to around $106 to $107, after Saudi Arabia shut its critical East-West pipeline following a drone attack on Friday that officials and the Associated Press said will keep the 1,200-kilometer artery mostly out of service for several weeks. The pipeline, which can carry up to 7 million barrels of oil per day, is Saudi Arabia's only route to move oil exports to the Red Sea port of Yanbu and around the blockaded Strait of Hormuz. West Texas Intermediate was trading near $102.66 per barrel. US Energy Secretary Chris Wright said he expects the pipeline to return online "soon," though traders noted Yanbu port holds only five to seven days of oil supply.

The pipeline shutdown deepens a supply crisis that has already sealed off multiple export corridors. The Strait of Hormuz remains blockaded by Iranian-linked attacks, and Houthi forces have taken control of the entire Red Sea coast in Yemen, effectively giving them command of the Bab el-Mandeb Strait, which at its peak carried over 9 million barrels of daily crude flows, roughly 9% of global demand. Gulf states called off a planned Monday meeting with Iran on reopening the Strait of Hormuz after Yemen's Houthis fired dozens of missiles and drones at Saudi Arabia's King Khalid airbase in Khamis Mushait, which the Houthis said was retaliation for more than 300 Saudi airstrikes on Yemen in five days. London Gas Oil surged toward $1,524 resistance, and northwest European gasoline margins climbed $3 to $52 per barrel.

Equity markets sold off sharply on the combination of rising energy costs and separate concerns over an AI development pause. The Nasdaq led the decline, falling as much as 1.7% before paring losses, while the S&P 500 fell as much as 0.8%. The 10-year Treasury yield touched 5.01% before pulling back to under 4.95%. The US Strategic Petroleum Reserve fell by roughly 0.4 million barrels to a multi-year low of 285 million barrels in the most recent week. Asian refiners said they are awaiting word on Saudi shipments and expecting tighter supply, while Polish refiner Orlen said it sees no immediate disruption as Saudi deliveries are expected to drop. The Breakwave Tanker Shipping ETF has surged 5,100% over the past year and 3,600% on a year-to-date basis, reflecting the extreme demand for tanker capacity as traditional shipping routes close.