Brent nears $108 after Saudi pipeline hit: why $120 oil is back on the table

Oil prices jumped on Monday after drone attacks forced Saudi Arabia to shut its East-West crude pipeline, removing a key bypass route just as flows through the Strait of Hormuz remain heavily constrained.

Brent crude rose about 2.9% to $107.66 a barrel, while West Texas Intermediate gained roughly 2.4% to $102.48.

The move pushed both benchmarks back towards last week’s highs and revived the worries around Brent climbing towards $120 if disruptions spread from Hormuz to alternative export routes.

Saudi’s bypass route is now part of the problem

The East-West pipeline runs about 1,200 kilometres from eastern Saudi Arabia to the Red Sea port of Yanbu and has become far more important since the US-Iran conflict restricted shipping through Hormuz.

Saudi Arabia says the system can pump about 7 million barrels a day at full capacity.

Before the latest shutdown, actual flows were closer to 4 million barrels a day, equivalent to roughly 4% of global supply.

Yanbu inventories may sustain exports for only five to seven days if repairs take longer than expected.

That changes the market maths. Until now, pipelines in Saudi Arabia and the UAE were one of the main reasons traders could argue that a partial Hormuz closure did not automatically mean a global supply crisis.

Damage to one of those routes removes part of that safety valve.

$120 is no longer a remote stress case

Goldman Sachs has already outlined a scenario in which Brent could rise above $120 if attacks on Middle East shipping intensify and Gulf output remains significantly below pre-war levels.

Daan Struyven, Goldman’s co-head of global commodities research, told Bloomberg that widening shipping disruptions had become a materially greater risk.

The bank recently raised its year-end Brent forecast, while warning that a prolonged supply shock could drive prices far beyond its base case.

HSBC has reached a similar conclusion. Analysts led by Kim Fustier raised the bank’s 2026 Brent forecast to $90 from $80 and see a scenario in which persistent disruption could lift crude towards $120.

The difference now is that the stress scenario is being tested while Brent is already close to $108 rather than $90.

Diplomacy is failing to remove the risk premium

The supply shock is also becoming harder to offset politically.

A planned meeting in Oman between Iran and Gulf states to discuss temporary shipping arrangements through Hormuz was postponed after regional governments failed to reach consensus.

As per local reports, Saudi Arabia had concerns over the proposal, while Bahrain declined to participate.

That leaves two important export routes under pressure at the same time: Hormuz in the Persian Gulf and the Red Sea corridor linked to Yanbu and Bab el-Mandeb.

Oil could still retreat quickly if the Saudi pipeline restarts within days or diplomacy produces a workable shipping deal.

But until one of those things happens, traders have fewer reasons to remove the geopolitical premium.