Brent crude climbed above $108 a barrel on Monday morning after a merchant vessel was struck in the Strait of Hormuz, killing one crew member, and Saudi Arabia shut its main pipeline bypassing the waterway, renewing fears that Middle East supply routes are closing. The oil market spent Monday morning pricing in a weekend of bad news from the Gulf.
Brent for October and November delivery gained over 3% and crossed $108 a barrel, while the US benchmark WTI for October rose 2.3% to around $102, both extending last week's advance after each reclaimed the $100 threshold.
Pipeline shutdown removes key alternative
Prices moved following Saudi Arabia's announcement that its East-West pipeline is temporarily closed after drone attacks. The line carries crude across the kingdom to Red Sea ports, allowing oil to reach export terminals without passing through the Strait of Hormuz, so its loss removes the main alternative at the moment the strait itself is most dangerous.
That danger was also demonstrated on Sunday, when a merchant vessel was hit in the strait, killing one person and injuring three others, according to Iranian authorities.
Passage through the strait has changed
Passage through the waterway now works very differently from before the war. Vessels must obtain Iranian permissionto transit, and Tehran is weighing a mechanism to charge service fees. Ships that fail to comply are reportedly targeted, while US forces periodically strike the Iranian coastline to contest Tehran's claim to control the strait.
Diplomatic efforts have stalled too: Oman has postponed planned talks between Iran and Gulf states on the future of the waterway, which carries a large share of the world's seaborne oil trade.
Record fuel prices in the US
The consequences are highly visible at American pumps. The US national average price of diesel crossed $6 a gallon on Friday for the first time in history, up from around $5.85 a week earlier and roughly 60% above the $3.71 drivers paid a year ago. Petrol is also averaging $4.22 after setting records over the Labor Day weekend.
Trump blames Ukraine
US President Donald Trump has pointed to a different cause. Speaking to reporters in Ireland on Sunday, where he was attending the Irish Open at his Doonbeg golf resort, Trump said Ukrainian President Volodymyr Zelenskyy "has to stop knocking out diesel fuel in Russia," adding: "Let him go after targets, but not diesel fuel, because he's causing a shortage of diesel fuel." Ukraine has struck more than 20 Russian refinery targets this summer, prompting Moscow to ban diesel exports. Trump repeated the claim on the flight back from his state visit to Ireland.
What the numbers show
The supply arithmetic suggests a more complex picture. Analysts attribute roughly 800,000 barrels a day of lost diesel supply to Russia's export ban, against about 1.2 million barrels a day from disruption around the Strait of Hormuz, according to Lipow Oil Associates. The wider picture is more lopsided still, as crude flows through the strait have fallen from around 20 million barrels a day before the war to about 7 million. Between them, the two conflicts have also shut refineries representing around 5 million barrels a day of capacity.
Source: AFP, Euronews
