KEY POINTS
- Brent rose 3.1 percent to $107.82 and WTI 3.2 percent to $103.22, extending last week’s 8 percent surge.
- A drone attack shut Saudi Arabia’s east-west pipeline, threatening up to 4 percent of global oil supply, with Yanbu holding only five to seven days of export inventory.
- Houthi strikes hit Jazan and a Saudi base, a tanker was struck in Hormuz, and Oman postponed Gulf-Iran talks on reopening the strait.
Oil prices rose more than 3 percent on Monday after fresh Houthi strikes on Saudi Arabia and Iranian attacks on ships in the Gulf deepened supply fears, compounding the closure of a key Saudi oil pipeline.
Brent crude futures gained 3.21 dollars, or 3.1 percent, to 107.82 dollars a barrel by 0340 GMT, while US West Texas Intermediate rose 3.17 dollars, or 3.2 percent, to 103.22. Moreover, the move extended an 8 percent surge last week that pushed Brent above 100 dollars for the first time since July.
Pipeline outage rattles supply
The market’s focus is Saudi Arabia’s east-west pipeline. According to ING strategists, attacks on Saudi energy infrastructure have stepped up, including strikes on that crucial line, though the extent of the damage remains unclear. Specifically, Saudi officials said a drone attack temporarily shut the pipeline, which lets the kingdom reroute exports and bypass the Strait of Hormuz.
Consequently, the outage threatens up to 4 percent of global oil supply. Furthermore, three industry sources said Yanbu holds only five to seven days of export inventory with the line down, sharpening the urgency of repairs.
Attacks widen across the region
However, the danger is spreading beyond the pipeline. Specifically, Saudi state media released footage of damaged homes and a mosque from a reported Houthi strike on Jazan province, while the Houthis said they also hit a Saudi military base nearby. Additionally, a vessel in the Strait of Hormuz was struck by a projectile, sparking a fire and forcing an evacuation, the UK maritime agency UKMTO said.
Iran reported one person killed and four crew wounded aboard an Iranian commercial ship struck off its coast. Meanwhile, the Houthis reached Perim island on Friday, tightening their grip on the Bab el-Mandeb strait, which has carried 4 to 5 percent of global supply. Ultimately, diplomacy stalled again, as Oman postponed a Monday meeting between Gulf states and Iran on reopening Hormuz, with no peace talks held since June’s interim deal collapsed.
