Oil Soars As Saudi Pipeline Faces Weeks-Long Outage — Schork Says US Reserves Could Hit ‘Operational Limits’ By November

Brent futures topped $109 per barrel after reports emerged that the key East-West pipeline could be shut for ‘weeks

• Stephen Schork, principal of The Schork Group, warned that the U.S. Strategic Petroleum Reserve could be drawn down to its ‘operational limits’ by November.
• Saudi Arabia shut its 1,200-kilometer East-West pipeline after attacks by Yemen-based Houthis damaged the critical route
• At the time of writing, Brent crude futures for November delivery were up more than 3.4% to around $109.3 per barrel.

Oil prices climbed on Tuesday as concerns over Middle Eastern supplies remained in focus, with Saudi Arabia’s critical East-West pipeline expected to be offline for weeks following last week’s attacks.

At the time of writing, Brent crude futures for November delivery were up more than 3.4% to around $109.3 per barrel, while October West Texas Intermediate (WTI) futures surged over 5% to $106.6 per barrel.

The United States Oil Fund (USO), which tracks WTI, jumped 4.2%, while the ProShares Ultra Bloomberg Crude Oil (UCO) ETF rose 4.4%.

Saudi Pipeline Remains Key Risk

Saudi Arabia shut its 1,200-kilometer East-West pipeline after attacks by Yemen-based Houthis damaged the critical route, which carries crude from the kingdom’s eastern oil fields to the Red Sea port of Yanbu.

The pipeline has become especially important because it lets Saudi crude bypass the Strait of Hormuz, where shipments have been heavily disrupted by the U.S.-Iran war. It reportedly transported about four million to five million barrels per day, equivalent to roughly 4% to 5% of global supply.

U.S. Energy Secretary Chris Wright reportedly said on Tuesday that flows could resume “within days.” However, other estimates suggest repairs could take five to six weeks, although partial operations may resume earlier.

Schork Warns About US Oil Reserves

Adding to supply concerns, Stephen Schork, principal of The Schork Group, warned that the U.S. Strategic Petroleum Reserve (SPR) could be drawn down to its “operational limits” by November.

“That well is virtually dry,” Schork told Bloomberg.

Schork has previously warned that the SPR is being depleted rapidly. Earlier this month, he estimated reserves could fall to about 245 million barrels by November, compared with the reserve’s roughly 700-million-barrel capacity.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.5%; the Invesco QQQ Trust ETF (QQQ) fell 0.6%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.8%. Retail sentiment on Stocktwits surrounding DIA was in the ‘bearish’ territory, while sentiment for QQQ and SPY was ‘extremely bearish.’

For updates and corrections, email newsroom[at]stocktwits[dot]com.<