Oil Surges as Saudi Pipeline Disruption Deepens 

Key Takeaways:

*Oil extends gains above $100 as markets price a growing risk of prolonged supply disruptions.

*Saudi Arabia’s East-West pipeline remains offline, removing a critical alternative route for exporting crude outside the Strait of Hormuz.

*Hormuz traffic has fallen sharply, with fewer than 10 vessel transits a day versus a recent 10-day average of 14.

Market Summary:

Oil remains the strongest bullish story across the commodity complex, with Brent trading around $106–$107 and WTI around $102–$103 as the market continues to price a growing risk of prolonged supply disruption. The latest catalyst is the shutdown of Saudi Arabia’s critical East-West pipeline, which allows crude to bypass the Strait of Hormuz. The pipeline can transport several million barrels per day, with reports putting capacity as high as roughly 7 million bpd, while around 4 million bpd can be rerouted toward the Red Sea port of Yanbu. Its continued outage therefore removes an important safety valve at precisely the time when shipping through Hormuz is severely constrained.

The supply risk has intensified following fresh Houthi missile and drone attacks on Saudi Arabia, while Iran-related tensions have continued to disrupt shipping in the Gulf. Vessel traffic through the Strait of Hormuz reportedly fell to fewer than 10 transits a day, compared with a recent 10-day average of 14. The strait previously handled roughly one-fifth of global oil supplies, making the decline in traffic particularly significant for the market. Iran has also claimed attacks involving US military assets and commercial shipping, while US Central Command has disputed some Iranian claims, adding to uncertainty over the security of the shipping corridor.

The most important issue for traders is now duration rather than the initial disruption itself. Saudi Arabia can use inventories and alternative routes to cushion the immediate impact, but reports suggest storage at Yanbu may provide only around 5–7 days of export coverage. If the East-West pipeline remains offline for an extended period, Saudi Arabia could face increasing difficulty maintaining normal export volumes. At the same time, postponed Gulf-Iran discussions have reduced hopes for a rapid diplomatic solution, while continued Houthi activity around the Red Sea and Bab al-Mandeb creates another layer of shipping risk. This has transformed the oil market from simply pricing a geopolitical premium into pricing the possibility of a sustained physical supply deficit.

The broader supply picture is already tight. Recent estimates indicate global inventories have experienced substantial draws since the conflict began, while the IEA has raised its expected oil deficit and pushed the return of a surplus further out. Russian oil infrastructure disruptions and attacks on regional energy facilities are adding further uncertainty, even as US crude production remains near record levels. The longer Saudi infrastructure and Hormuz disruptions persist, the greater the risk of another leg higher in crude prices, with $110 and potentially $120 increasingly discussed in prolonged-disruption scenarios. At the same time, any credible ceasefire, reopening of the pipeline or improvement in Hormuz shipping could trigger a sharp reversal in the geopolitical premium.

Technical Analysis 

CL-Oil, H4

Crude oil remains in a strong bullish structure with price continuing to form higher highs and higher lows after breaking above the 92.85 resistance level. Price is currently trading around 102.85, close to the key 104.75 resistance, after a sharp rally from the 92.85 area. The latest candles show some consolidation just below 104.75, suggesting that buyers are facing resistance near this level. A sustained break above 104.75 would strengthen the bullish structure and potentially open the way toward the next major resistance around 114.15. On the downside, 92.85 remains the key support level and an important area for maintaining the broader bullish bias.

Momentum remains supportive but is showing early signs of moderation. RSI is around 62, remaining above the neutral 50 level but below the overbought zone, indicating that bullish momentum is still present without being excessively stretched. However, RSI has eased from its recent high and is slightly below its RSI moving average, suggesting that momentum may be cooling as price approaches resistance. MACD remains in positive territory, while the histogram has turned slightly negative. This indicates that although the broader momentum remains bullish, short-term upside momentum has weakened and a consolidation or pullback could develop.

Resistance Levels: 104.75, 114.15

Support Levels: 92.85, 80.35