October WTI crude oil prices rose by $3.30 (+3.25%) and October RBOB gasoline prices increased by $0.1164 (+3.51%) on Monday. The surge is attributed to fears of further tightening global oil supplies following the shutdown of Saudi Arabia’s East-West pipeline, which transports 7 million barrels per day (bpd). This closure, imposed due to recent Houthi attacks, has disrupted a critical route for oil.
Saudi Arabia’s crude production fell to 6.238 million bpd in August, marking the lowest output since 1990. The pipeline’s closure has prompted an additional supply squeeze, compounded by other geopolitical tensions affecting oil production in both the Middle East and Russia. Vitol Group reported that Middle Eastern crude exports are down by about 2 million bpd, while Russian exports have also been hindered, contributing to a projected global oil deficit of 1.7 million bpd for the year.
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