Brent crude hit $108 and U.S. crude oil reached $103 on Monday after Saudi Arabia shut the East-West Pipeline Saudi Arabia as a precautionary measure following attacks on the route. The closure tightened an already strained energy corridor and fed directly into higher fuel costs for drivers, shippers and farmers.
Saudi Arabia shuts a key route
Saudi Arabia said on Friday that the pipeline was shut down as a precautionary measure, and the Saudi Energy Ministry did not say when it would be operational again. The East-West Pipeline is a key route for energy supplies, so the move removed a buffer just as trading in oil was already reacting to wider supply worries.
14 vessels passed through the Strait of Hormuz on Sunday, after 12 on Saturday, 11 on Friday and nine on Thursday. That sequence shows how thin traffic remains through the route even before the latest shutdown, leaving less room for disruption if flows tighten again.
Diane Swonk on diesel costs
$6.23 a gallon for diesel on Monday pushed the pressure beyond oil futures and into the costs that move through the economy. Diane Swonk, KPMG chief economist, said, “The cost of diesel gets into just about everything.” She added that it runs from “running a farm... [to the] cost of food, but also everything across the economy that’s shipped,” and called it an “inflationary problem” that could last for months.
$4.31 a gallon for regular unleaded gas on Monday added to the squeeze, after regular gas had risen more than 45% since the U.S. and Israel launched the Iran war. U.S. crude oil has climbed more than 50% since Feb. 28, which helps explain why fuel prices are now doing more than tracking headlines: they are moving into household budgets and freight bills.
Riyadh, Hormuz and Jeddah
On Sunday, a meeting between Iran and Gulf countries about Hormuz was postponed after the Omani foreign minister said it was delayed “in the interests of consensus,” and Tehran said it was postponed at the request of Riyadh. On Monday, Saudi state media said Crown Prince Mohammed bin Salman met with U.S. Central Command Adm. Brad Cooper in Jeddah, a day when oil traders were already marking up risk across supply routes.
The sharpest question now is when the East-West Pipeline will reopen. The ministry’s silence on timing keeps the market focused on how long the route stays offline, and on whether diesel and crude stay tied to a tighter supply picture instead of easing back after the first jump.
