Oil Prices Rise Over 3% as Saudi Attacks and Hormuz Risks Grow

Post by : Saif

Oil prices climbed more than 3% on Monday as fresh attacks on Saudi Arabia and ships near the Strait of Hormuz increased concerns about global energy supplies.

Brent crude futures rose $3.21, or 3.1%, to $107.82 a barrel by 0340 GMT. U.S. West Texas Intermediate crude gained $3.17, or 3.2%, to $103.22 a barrel.

Saudi Pipeline Shutdown Raises Supply Concerns

Saudi Arabia's East-West oil pipeline remains temporarily shut after a drone attack. The pipeline is important because it allows the country to transport oil toward the Red Sea and reduce its dependence on the Strait of Hormuz for exports.

The disruption could put as much as 4% of global oil supply at risk if the pipeline remains offline for an extended period.

Industry sources said Saudi Arabia's Yanbu port has enough oil inventory to maintain exports for only about five to seven days if the pipeline continues to be unavailable.

Saudi authorities have not provided a clear timeline for repairs or confirmed the full extent of the damage.

New Houthi Attacks Add to Market Pressure

Saudi state media released footage showing damage to homes and a mosque in the southern Jazan province following what it described as a Houthi attack.

The Iran-aligned Houthi movement also claimed it had targeted a Saudi military base in a neighbouring province.

The attacks have added another layer of risk for oil markets, particularly as the Houthis have expanded their presence near the Bab el-Mandeb Strait.

Hormuz Shipping Faces Fresh Risks

Security concerns have also increased around the Strait of Hormuz, one of the world's most important oil shipping routes.

The British maritime security agency UKMTO said a vessel was hit by a projectile while travelling through the strait on Sunday. The incident caused a fire and forced the crew to evacuate.

Iran separately reported that one person was killed and four crew members were wounded after an Iranian commercial vessel was struck off the country's coast.

Any prolonged disruption to shipping through Hormuz could have a significant impact on international oil supplies and prices.

Houthis Move Toward Bab el-Mandeb

The Houthis reached Perim Island on Friday, strengthening their position near the Bab el-Mandeb Strait at the entrance to the Red Sea.

The waterway has carried around 4% to 5% of global oil supplies in recent months. Greater control of the area could create additional risks for tankers and other commercial vessels.

The developments around both Hormuz and Bab el-Mandeb have increased concerns among traders about the security of major energy routes.

Read more: South Korea Condemns Attack on Cargo Ship in Strait of Hormuz

Oman Meeting on Hormuz Postponed

Diplomatic efforts to reduce the shipping risks have also faced a setback. Omani Foreign Minister Badr Albusaidi said a meeting planned for Monday between Iran and Gulf countries to discuss the Strait of Hormuz had been postponed.

The delay comes as attacks continue around key energy routes and oil prices remain above $100 a barrel.

Crude prices had already increased by about 8% last week, moving above $100 for the first time since July.

Global Oil Market Remains Under Pressure

The combination of the Saudi pipeline shutdown, attacks on energy infrastructure and shipping risks around Hormuz and Bab el-Mandeb has created fresh uncertainty for global energy markets.

Traders are closely watching the condition of Saudi Arabia's pipeline and developments around the two major maritime routes. A longer disruption could further reduce available supplies and put additional upward pressure on crude prices.

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