Global oil markets surged on Tuesday, as Brent crude approached 110 dollars a barrel following the suspension of Saudi crude loadings at Yanbu and new export disruptions in Libya.
Crude Prices Surge Amid Yanbu Loading Suspensions and Saudi Export Cancellations
Oil prices closed up 3 dollars on Tuesday as maritime shipping sources confirmed that crude oil loadings at the Saudi export terminal of Yanbu on the Red Sea had been suspended. Riyadh also informed its European clients that certain crude deliveries scheduled for late September would be canceled. These developments intensified fears that supply bottlenecks along critical export routes could persist for weeks.
The disruptions follow attacks on the East-West pipeline by Yemen’s Houthi forces, which forced the world’s top crude exporter to shut down the vital overland link. The pipeline had served as a primary detour after the closure of the Strait of Hormuz—a crucial waterway that previously handled a fifth of global oil and liquefied natural gas supplies—following the American-Israeli war against Iran. With tanker traffic through the Strait of Hormuz severely restricted, trade data showed that cargo ship traffic transiting the strait fell to just four vessels on Monday.
West Texas Intermediate futures outperformed Brent gains as investors rushed into American crude as an alternative. Brent finished up 3.07 dollars, or 2,9 %, at 108.75 dollars a barrel, while WTI closed up 4.44 dollars, or 4,38 %, at 105.83 dollars a barrel. Both contracts settled at their highest levels since May 19.
Refining Damage and Libyan Outages Compound Global Shortages
Beyond the immediate shipping bottlenecks in the Red Sea, global refining capacity has taken a severe hit from ongoing conflicts. Six to seven million barrels per day of refining capacity have been damaged across the Middle East and through attacks in Russia, according to Andy Lipow, president of Lipow Oil Associates. This widespread infrastructure damage has left distributors paying significantly higher prices for diesel and gasoline.
Simultaneously, a separate crisis unfolded in North Africa. In Libya, the National Oil Corporation announced that operations at three oil fields had been suspended after striking members of the Petroleum Facilities Guard closed a valve on the Hamada-Zawiya crude export pipeline. The guard warned that the shutdown could widen if demands are unmet, prompting the state oil company to state it may invoke force majeure if the valve remains closed.
Immediate Pressure on French Fuel Consumers and Retail Markets
In France, the sustained oil rally has pushed prices at the pump to alarming levels. By early September, a litre of diesel averaged over 2.25 euros—up sharply from 1.67 euros prior to the conflict—while a litre of gasoline reached 2.08 euros compared to 1.68 euros in February. Although retail fuel prices lag behind raw crude movements, service stations quickly price in future restocking costs. As Grégory Caret, director of UFC-Que Choisir, noted, when the price of Brent rises, stations anticipate the sums they will have to pay to renew their stock.
The transmission of cost variations to French drivers happens swiftly once refiners adjust their prices. The Banque de France notes that the full pass-through to fuel prices takes about 20 business days, though more than half of the price transmission has already taken place within a week, meaning current crude spikes will register rapidly at service stations nationwide.
Calls for State Intervention Clash with Strained Public Finances
As pump prices scale new heights, industry leaders have urged the government to intervene. Michel-Édouard Leclerc, president of the strategic committee for E.Leclerc centers, argued that there is a threshold where public authorities will be forced, if this were to last or if it were too severe, to slightly reduce fuel taxation.
Despite mounting pressure from retail executives and consumer groups, the French government has dismissed any immediate tax cuts, citing heavily strained public finances already operating in the red. While industry figures view retail fuel reaching three euros a litre as unrealistic in the immediate short term, Philippe Casbas, president of the French Petroleum Industry Union, warned that plus rien n’est invraisemblable
should the Middle East conflict continue.