European Oil Cargoes Top $130 as Saudi Supply Disruption Hits Market

Some physical oil cargoes in Europe have risen above $130 a barrel as buyers scramble to replace disrupted Saudi supplies.

North Sea Forties crude reached $136.75 a barrel, according to Reuters, approaching its April record of $147.37.

The surge follows Saudi Arabia’s cancellation of late-September cargoes destined for European customers.

Saudi supply has been disrupted by the attack on the kingdom’s East-West Pipeline, which forced the suspension of loadings from the Red Sea port of Yanbu.

Yanbu is strategically important because the East-West Pipeline allows Saudi oil exports to bypass the Strait of Hormuz.

That alternative route has become increasingly important as conflict in the Middle East places pressure on shipping through Hormuz.

Brent crude futures have also climbed towards $110 a barrel, while production outages in Libya are adding further pressure to supplies.

The physical market is particularly significant because it reflects the prices buyers are actually paying to secure specific barrels rather than futures contracts alone.

Europe is therefore beginning to experience the economic consequences of disruption to Middle Eastern energy infrastructure directly.

With pressure around the Strait of Hormuz and disruption affecting infrastructure designed to bypass it, buyers are paying sharply higher prices to secure replacement supplies.

Forties crude at $136.75 provides the clearest indication yet of that pressure.

Source

• Reuters – Physical oil cargoes top $130 amid Saudi supply disruption