(Bloomberg) — Brent crude fell Friday but posted its biggest weekly gain since July as escalating Middle East hostilities and new threats to Saudi Arabia’s oil infrastructure kept supply concerns elevated.
The global benchmark declined 2.8% on Friday after reaching a four-month high earlier in the week. Despite the pullback, Brent remains up more than 70% this year as the Iran conflict continues to disrupt regional energy flows.
Saudi Arabia shut its crucial East-West oil pipeline as a precautionary measure, raising concerns about the vulnerability of alternative export routes that have become increasingly important as shipping through the Strait of Hormuz remains constrained.
The shutdown comes as Iran-backed Houthi forces advance toward coastal areas bordering the Bab el-Mandeb Strait. The group has also launched missile and drone attacks on Saudi Arabia, damaging energy sites and threatening infrastructure near the kingdom’s Red Sea export routes.
“Most traders feel the damage to the East-West pipeline is contained for now and will likely be repaired quickly,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc. Still, the disruption raises questions about the reliability of alternatives to Hormuz that have helped sustain oil flows in recent months, he said.
Some crude continues to move through Hormuz, often aboard tankers sailing with their transponders switched off. The UK Maritime Trade Operations received a report that two vessels were struck by unidentified projectiles west of Khasab, Oman, on Thursday, highlighting the continued risks to shipping.
Diplomatic efforts are also underway. Foreign ministers from the six-member Gulf Cooperation Council are expected to meet their Iranian counterpart Monday as Oman and Iran seek support for a temporary framework to manage shipping through Hormuz, the Financial Times reported.
Meanwhile, the International Energy Agency warned Friday that disruptions to global oil supplies and higher fuel prices are weighing on consumption. The agency now expects global oil demand to post its largest annual decline since the Covid-19 pandemic.
Saudi Arabia said its oil production fell again last month to its lowest level since 1990 as regional disruptions continued.
Brent remains below its wartime peak of just above $126/bbl reached in April. Refined products, particularly diesel, have posted even sharper gains as disruptions in the Middle East and Russia tighten global supplies.
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