Oil prices jumped about 3% on Monday, extending last week’s rally, as new strikes on Saudi energy and civilian sites and attacks on Gulf shipping deepened fears over global supply after a key Saudi pipeline was shut down.
Brent crude futures climbed $2.93, or 2.8%, to $107.54 a barrel by 07:00 GMT, while U.S. West Texas Intermediate (WTI) futures rose $2.88, or 2.9%, to $102.93 a barrel.
Both benchmarks are now trading at levels last seen before the summer, having broken above the psychologically significant $100 mark for the first time since July during last week’s 8% surge.
At the center of the latest spike is the temporary closure of Saudi Arabia’s East-West pipeline, a vital artery that allows the kingdom to move crude from its eastern oil fields to the Red Sea port of Yanbu, bypassing the narrow and increasingly contested Strait of Hormuz.
Saudi officials confirmed the line was shut following a drone strike, though the extent of the damage remains unclear.
“This follows a step-up in attacks on Saudi Arabian energy infrastructure, including targeting the crucial East-West pipeline,” commodity strategists at ING wrote in a note to clients, cautioning that it was still too early to assess how badly the pipeline was damaged or how long repairs might take.
The stakes are considerable: the pipeline’s closure threatens as much as 4% of global oil supply. According to three industry sources with knowledge of Saudi export operations, inventories at Yanbu are sufficient to sustain exports for only five to seven days before shortages begin to bite a narrow window that has traders on edge.
Saudi state media on Sunday broadcast footage showing damage to residential homes and a mosque in the kingdom’s southern Jazan province, which it attributed to a Houthi attack.
The Iran-aligned Houthi movement, for its part, claimed it had also struck a Saudi military installation in a neighboring province, underscoring the widening geographic scope of the assault on Saudi territory.
The escalation has not been confined to Saudi soil. The British maritime security agency UKMTO reported that a vessel transiting the Strait of Hormuz was hit by a projectile on Sunday, sparking a fire that forced the crew to abandon ship.
Separately, Iran reported that one crew member was killed and four others wounded when an Iranian commercial vessel was struck off the country’s own coast, a sign that the violence at sea is now cutting in multiple directions and sparing no flag.
Compounding the threat to shipping lanes, Yemen’s Houthi forces were reported to have seized the strategic island of Perim on Friday, extending their grip over the Bab el-Mandeb strait.
That waterway, along with Hormuz, is one of the world’s most important chokepoints for seaborne crude, together carrying an estimated 4% to 5% of global oil supply in recent months.
Hopes for a diplomatic off-ramp suffered a setback over the weekend. Omani Foreign Minister Badr Albusaidi announced on social media platform X that a planned Monday meeting in Oman between Gulf states and Iran, intended to address rising tensions in the Strait of Hormuz, had been postponed, though he did not specify a new date or the reason for the delay.
The broader conflict, now in its sixth month since being launched by the United States and Israel, remains without a clear path to resolution.
No further peace talks have taken place since an interim agreement reached in June broke down, leaving markets to price in the risk of prolonged disruption to some of the world’s most vital energy corridors.
With two of the world’s key maritime chokepoints for oil now under direct threat and a major overland pipeline offline, analysts warn that further price volatility is likely until there is clarity on both the scale of the pipeline damage and the trajectory of the wider conflict.
Traders will be watching closely for any signs of repair progress at the East-West line, further attacks on shipping, or a revival of the stalled Gulf-Iran diplomatic track.
WHAT YOU SHOULD KNOW
The core takeaway: oil’s 3% jump isn’t from one event; it’s from simultaneous threats to three critical supply routes at once. Saudi Arabia’s East-West pipeline is down with only 5-7 days of buffer stock at Yanbu, the Strait of Hormuz is seeing vessels attacked, and the Houthis just seized Perim Island to tighten control over Bab el-Mandeb.
With both major chokepoints around the Arabian Peninsula under strain simultaneously and Gulf-Iran talks now postponed instead of easing tensions, the market has little reason to expect near-term relief, meaning further price volatility is more likely than a pullback.
