West Texas Intermediate (WTI) futures on NYMEX extended their opening gains in the European trading session on Monday, trading almost 3% higher slightly above $99.50, driven by heightened fears of further energy supply risks following recent attacks and disruptions in the Middle East [1]. Brent crude similarly jumped around 3% at opening, moving above USD 107 per barrel, as escalating geopolitical tensions raised concerns over global supply [2].
Both articles cite the precautionary shutdown of Saudi Arabia's East-West pipeline late on Friday after attacks, with Saudi Arabia’s Ministry of Energy confirming the pipeline was attacked and shut down as a precautionary measure [1][2]. Danske Bank’s research team warns that the closure of this pipeline could endanger up to 4% of global oil supply, as it is a key export route allowing crude to bypass the Strait of Hormuz [2]. Deutsche Bank analysts note that these developments have reinforced market concerns around regional supply security and key shipping routes [1].
Additional supply risks stem from the postponement of a planned meeting between Iran and Gulf states in Oman, which was intended to discuss the creation of a temporary shipping corridor through the Strait of Hormuz. Iran’s Foreign Ministry spokesperson stated that Saudi Arabia insisted the meeting not take place [1]. Attacks by Iran-backed Houthis, including drone strikes targeting strategic points along the Red Sea and rising risks around the Bab el-Mandeb Strait, have further contributed to market anxiety over important transit routes [1][2].
Technical analysis of WTI shows the price holding well above the 20-day exponential moving average (EMA) at $89.92, with the Relative Strength Index (14) at 69.63 near overbought territory, suggesting the rally could be entering a mature stage even as upside momentum remains intact [1]. Danske Bank expects markets to stay focused on disruption risks and the timeline for restoring flows, indicating continued volatility and attention to supply restoration efforts [2].
CONCLUSION
Both WTI and Brent crude prices have surged in response to the shutdown of Saudi Arabia's East-West pipeline and escalating Middle East tensions, with up to 4% of global oil supply at risk. Market sentiment remains bullish as supply security concerns persist, and analysts expect continued focus on disruption risks and restoration timelines. The ongoing geopolitical instability is likely to keep oil prices elevated in the near term.