October WTI crude oil (CLV26) is up +3.30 (+3.30%) today, and October RBOB gasoline (RBV26) is up +0.0690 (+2.09%). Crude oil and gasoline prices are sharply higher today, with crude posting a 3.75-month high. Energy prices are rallying on fears that global oil supplies will tighten further after Saudi Arabia shut down its key East-West pipeline after attacks by Houthi rebels.
Crude prices fell from their best level when President Trump said that Ukraine and Russia agreed to not attack each other's energy targets. Middle East Supply Constraints Lift Crude Oil Prices Hotter US Weather Forecasts Boost Nat-Gas Prices Goldman Sachs Expects Fed Chair Kevin Warsh to Raise Rates This Week — But Not Because of Oil Prices. Tired of missing midday reversals?
The FREE Barchart Brief newsletter keeps you in the know. Crude prices surged today amid concerns that global oil supplies will tighten further after Saudi Arabia closed a major pipeline following attacks, disrupting a key route that bypasses the Strait of Hormuz. Saudi Arabia closed the East-West pipeline late last Friday, which carries 7 million bpd of crude, as a precaution following attacks by Houthi rebels and gave no indication of when it will reopen.
The pipeline moves oil away from the Persian Gulf toward the Red Sea, where it can be loaded on tankers. Crude also has support as Yemen's Houthi rebels target energy facilities in Saudi Arabia, forcing several oil facilities to halt production. Saudi Arabia on Thursday said its crude production in August fell to 6.238 million bpd, the lowest since 1990.
The Houthi rebels captured the strategic Red Sea port city of Mokha last Thursday, 50 miles from the narrow Bab al-Mandab Strait at the southern end of the Red Sea, putting the group in a stronger position to attack ships. Since the closure of the Strait of Hormuz, Saudi Arabia has pivoted to the Red Sea to export most of its oil, but over the past two months, escalating tensions with the Houthis have disrupted that route. Vitol Group said that global oil markets are continuing to tighten, with the loss of about 2 million bpd from crude exports in the Middle East, and a further 2 million bpd from Russia as a result of Ukraine's drone attacks.
Data compiled by Bloomberg, Kpler and Vortexa showed that Saudi Arabia's Aug crude exports dropped to about 3 million bpd, the lowest amount in 9 years. Crude prices also have support on concerns that Israel could be dragged back into the US-Iran conflict. Israeli Defense Minister Katz said last Thursday that an Iranian attack on Israel would free Israel from any existing restrictions in a response against the regime in Iran.
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