WASHINGTON (dpa-AFX) - Crude oil prices have catapulted on Tuesday, adding to yesterday's surge, as supply concerns mount after Saudi Arabia shut its East-West pipeline on Friday. In addition, the cancellation of talks between the Gulf Cooperation Council members and Iran yesterday has left reopening of the Strait of Hormuz uncertain.
WTI Crude Oil for October delivery was last seen trading up by $4.37 (or 4.31%) at $105.76 per barrel.
As the world struggles to battle the effects of supply disruptions caused due to the U.S.-Iran war that began in late February, last Friday Saudi Arabia's decision to shut its vital pipeline added another dimension to the crisis.
In the recent weeks, the Iran-aligned Houthi militant group of Yemen stepped up their attacks on Saudi Arabia-linked vessels as well as on targets in Saudi Arabia to gain control over the Bab el-Mandeb Strait.
After the Houthi's drone attacks struck the East-West pipeline near the Riyadh and Medina regions, Saudi Arabia announced closing it temporarily.
Saudi Arabia utilized this nearly 750-mile-long line to bypass the Strait of Hormuz and to re-route most of its crude loadings (almost 4 million barrels per day) from ports in the Persian Gulf to the port city of Yanbu in the Red Sea.
Saudi Arabia has not disclosed either the extent of damage or the timeline on repair work. Citing sources, the Associated Press reported that the process could take anywhere from three to five weeks.
Concerns have increased as the rebel group is advancing rapidly to exercise full control over the Red Sea route.
Following last week's capture of the port of Mokha and Perim island, the Houthis seized the islands of Greater and Lesser Hanish near the Bab el-Mandeb Strait.
Oil and energy traders welcomed last Friday's announcement of a meeting between the leaders from the Gulf Cooperation Council and Iran on Monday in Oman, which triggered expectations of an earlier reopening of the Strait of Hormuz.
However, the enthusiasm was short-lived after Oman's Foreign Minister Badr Albusaidi announced that the meeting was cancelled due to a lack of consensus.
Today, the United Kingdom Maritime Trade Operations center stated that a vessel transiting the Strait of Hormuz was hit by an 'unknown projectile.'
Citing Kpler's data, Reuters reported that four vessels transited the strait on Monday compared with 10 vessels the previous day. The data also showed that 21 cargo vessels passed through the Bab el-Mandeb Strait, down from 28 of the previous day.
U.S. President Donald Trump messaged through Truth Social that the U.S. is open to the concept of negotiating a deal with Iran. Trump claimed that Iran wants to make a deal, quickly and badly.
Categorically rejecting Trump's claims, the secretary of Iran's Supreme National Security Council Mohsen Rezaei stated that Iran is not ready to talk with the U.S. until its conditions are met.
In Libya, the National Oil Corporation threatened to declare force majeure after security force members (Petroleum Facilities Guard) assigned to protect the country's oil infrastructure shut a pipeline valve and halted production at the Hamada and Tahara oilfields. The PFG is demanding to be transferred financially and administratively to the National Oil Corporation from Libya's defense ministry.
Yesterday, Trump claimed that Russia and Ukraine agreed to halt their attacks on each other's energy installations. However, Ukraine's President Volodymyr Zelenskyy clarified that Ukraine will halt its attacks only if Russia does the same.
Stating that the spill-over of the Russia-Ukraine war to the Black Sea region is unacceptable, today the Foreign Minister of Turkey Hakan Fidan hinted that Turkey had intensified its efforts to find a solution to the war.
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