Saudi East-West Pipeline Shutdown Continues as WTI Hits $102 and Brent Surpasses $105

Saudi Arabia's critical East-West oil pipeline shutdown continues to drive up global oil prices amid supply concerns from the Middle East. According to Bloomberg on Wednesday, West Texas Intermediate (WTI) crude rose above $102 per barrel after a more than 1% gain the previous day. Brent crude also closed above $105 per barrel.

The primary driver behind the price surge is the ongoing shutdown of Saudi Arabia's East-West pipeline, which was damaged in an attack last week and remains closed without a confirmed restoration date from Aramco. Saudi Arabia reportedly aims to offset the pipeline gap by expanding oil exports through the Strait of Hormuz.

Tensions around the Strait of Hormuz persist. Iran's Fars News Agency cited Revolutionary Guard Navy as reporting that a supertanker attempting to pass through restricted waters collided with mines and exploded, though U.S. Central Command (CENTCOM) denied these claims.

U.S.-Iran negotiations remain uncertain. Iranian National Security Council Secretary Mohsen Rezaei stated Iran would not negotiate until its conditions are met, while President Donald Trump suggested Iran is 'urgently seeking a deal' and hinted at potential progress.

CIBC Private Wealth Group Senior Energy Trader Rebecca Bavbin noted the oil market remains caught between supply constraints and signals of de-escalation, adding that markets will ultimately prioritize actual oil supply and infrastructure conditions over speculation.

Supply concerns are evident in futures markets, with the WTI near-month to far-month spread widening to a $4.44 per barrel backwardation—significantly expanding from under $1 a month ago—as traders signal tight short-term supply.

The Middle East conflict's potential escalation toward major oil-producing regions has driven global oil prices up approximately 80% year-to-date. Rising oil prices have also contributed to increased inflationary pressure, pushing U.S. 10-year Treasury yields above 5% for the first time since 2023.