Global Oil Price Hits $108 per Barrel on Supply Cuts
Brent crude has surged past $108 per barrel, marking a 50% increase from June levels. This spike follows the shutdown of Saudi Arabia's East-West pipeline and ongoing disruptions in the Strait of Hormuz.
Global oil prices have risen to $108 per barrel. This represents a 50% increase from the $70 level recorded in June 2026. The primary driver is a sharp reduction in available global supply. Escalating conflicts in the region have disrupted key export routes. These disruptions are now affecting energy costs worldwide.
Consumer prices are rising in major economies. In the UK, average petrol prices have exceeded 170p per litre. This is the highest level since 2022. US diesel prices have also reached a record high above $6 per gallon. Natural gas costs in Europe have nearly doubled since July.
Pipeline shutdown reduces export capacity
Saudi Arabia increased usage of its East-West pipeline after February. This route bypasses the Strait of Hormuz. The pipeline has a capacity of 3.6 million barrels per day. It was shut down on Friday following drone attacks. Saudi authorities blamed Iran-backed militias for the incident.
Repairs may take up to eight weeks according to Chatham House. US Energy Secretary Chris Wright stated the line will restart soon. Houthi attacks on other Saudi facilities have also halted operations temporarily. These events have removed a critical alternative route for oil exports.
Strait of Hormuz flow drops sharply
The Strait of Hormuz handled 21 million barrels per day before the war. Kpler estimates this volume has fallen to 8.6 million barrels per day. Independent analysts report the waterway remains significantly obstructed. US officials claim flows are near pre-war levels, but data suggests otherwise.
Houthis have also captured territory near the Bab al-Mandab Strait. This chokepoint handles about 5% of global oil supplies. The Suez Canal route also carries a similar share of supply. Markets fear these arteries face further disruption from regional actors.
Inflation risks rise across markets
Higher energy costs are feeding into broader inflation. UK household energy bills are forecast to rise by 25% in January. This adds approximately £440 to annual costs for a typical home. US gasoline prices have climbed from $3.80 to $4.32 per gallon since July.
Economic forecasters warn of an inflationary shock. This could force central banks to raise interest rates. Higher rates would increase mortgage costs and reduce consumer spending. Food and retail prices are expected to rise as a result. GN auto markets/energy: crude oil prices confirms the severity of the current supply constraints.
