Oil prices climbed more than three per cent early Monday after attacks forced Saudi Arabia to shut a major pipeline that carries crude from the Persian Gulf side of the country to the Red Sea.

Brent crude traded near US$107.61 a barrel after reaching US$108.65. West Texas Intermediate, the North American benchmark, was near US$102.53.

The prices were intraday figures and could change substantially before markets close.

Saudi Arabia temporarily closed its East-West Pipeline after a drone attack. The route is important because it allows crude to bypass the Strait of Hormuz, where shipping has already been reduced by the continuing Middle East conflict.

Reuters reported the outage could affect as much as four per cent of global oil supply if it lasts. Inventories at the Red Sea port of Yanbu were estimated to cover five to seven days of exports.

Oil had already gained about nine per cent during the previous week. The new disruption adds uncertainty about how much Middle East crude can reach buyers and how long tankers and refiners will operate under constrained conditions.

The price increase has two sides for Alberta.

Higher benchmark prices can improve revenue for producers and may increase provincial royalty income. They can also strengthen cash flow for drilling, maintenance and service activity if the increase is sustained.

The benefit is not automatic. Alberta heavy oil usually trades at a discount to West Texas Intermediate and company results also depend on transportation costs, exchange rates, hedging and the price difference between crude grades.

Consumers and farm businesses face the other side of the move.

Crude oil is a major input in gasoline, diesel and many petroleum-based products. A sustained increase can raise fuel costs for harvesting, grain drying, trucking, construction and municipal operations.

Retail fuel prices do not move in a fixed one-to-one relationship with crude. Refinery capacity, wholesale margins, taxes, local competition and inventories also affect what drivers pay.

The Bank of Canada said Sept. 2 that higher energy prices were the main reason national inflation had been hovering near three per cent. It warned that a longer period of high oil prices and elevated refinery margins would increase the risk that energy costs spread into other goods and services.

The central bank held its policy rate at 2.25 per cent but said inflation risks had increased. Higher fuel and freight costs can complicate future rate decisions if they contribute to broader price growth.

That matters in rural Alberta, where families and businesses often drive longer distances and farms consume large volumes of diesel during harvest.

The latest market move also came as regional diplomacy stalled. A meeting involving Gulf states and Iran that was expected to address shipping through the Strait of Hormuz was postponed.

The pipeline shutdown does not mean four per cent of world supply has been permanently lost. The effect depends on repairs, Saudi inventory use, alternate routes, shipping conditions and production decisions elsewhere.

Analysts cited by Reuters said a prolonged disruption could push Brent toward US$120 a barrel.

For Alberta readers, the clearest near-term indicators will be the Western Canadian Select discount, local wholesale gasoline and diesel prices, the Canadian dollar and whether the Saudi route returns to service.