Saudi East-West Pipeline Shut for Weeks After Drone Attacks Sending Oil Above $100

Saudi Arabia closed its roughly 750-mile East-West pipeline, known as the Petroline, after it was struck by multiple drone attacks launched from Iraq, with the Saudi Ministry of Energy confirming the shutdown as a precautionary measure. The pipeline runs from Abqaiq on the kingdom's eastern Gulf coast to the port of Yanbu on the Red Sea, making it the critical alternative to the Strait of Hormuz for Saudi oil exports. The damage, visible in satellite imagery showing extensive fire destruction around a pumping station near Al Mesba'ah, is severe enough to keep the pipeline out of service for several weeks, according to reports.

The Saudi Ministry of Foreign Affairs condemned the strikes, noting that drones targeted the Riyadh and Madinah regions and caused several injuries. Saudi Arabia said it would not respond immediately, giving the Iraqi government space to react. The attacks come as Iran-backed Houthis also threaten shipping routes in the region, compounding pressure on Saudi Arabia's ability to export oil.

Oil prices surged above $100 a barrel as the market, already tight, absorbed the prospect of a prolonged supply constraint. The USO oil ETF hit fresh cycle highs, with analysts noting that the steep backwardation in the futures curve adds a further tailwind for commodity ETFs. Gulf equity markets were mixed as energy and shipping security concerns weighed on the region. In the United States, stocks pulled back sharply on Monday, with the Nasdaq leading the decline as crude's rebound rattled investors.