Global oil prices surged on Monday after Saudi Arabia shut down a major crude pipeline following drone attacks, while fresh strikes and growing tensions around the Strait of Hormuz raised fears of further disruption to global energy supplies.
Brent crude rose by more than $3 a barrel, reaching about $108.23, while US West Texas Intermediate crude climbed above $103 per barrel as markets reacted to the worsening security situation in the Middle East.
The Saudi East-West Pipeline, which stretches about 1,200 kilometres across the kingdom, has become a crucial alternative route for transporting crude to the Red Sea when shipments through the Strait of Hormuz are disrupted.
The pipeline has reportedly been carrying between four and five million barrels of oil per day, equivalent to roughly four to five per cent of global oil supply. Its shutdown has therefore raised fresh concerns about the availability of crude on international markets.
Saudi authorities said the pipeline was temporarily shut as a precaution after drones struck infrastructure in the Riyadh and Madinah regions, causing injuries and damage.
Iraq has said the drones originated from its territory and pledged to investigate the incident. No group has officially claimed responsibility for the pipeline attack.
The situation has been further complicated by developments around the Strait of Hormuz, one of the world’s most important oil shipping routes.
The British maritime security agency UKMTO reported that a vessel was struck by a projectile while travelling through the strait, causing a fire and forcing its crew to evacuate.
Meanwhile, Iran-backed Houthi forces have tightened their control around parts of Yemen’s Red Sea coastline and the Bab el-Mandeb Strait, another critical route for international shipping and energy supplies.
Diplomatic efforts to ease tensions have also suffered a setback. A meeting involving Iran and Gulf states that was expected to address arrangements for shipping through the Strait of Hormuz was postponed, according to Oman.
The combination of attacks on energy infrastructure, threats to shipping routes and stalled diplomatic efforts has heightened fears that the disruption to Middle Eastern oil supplies could become more severe.
For oil-importing countries, prolonged disruption could translate into higher fuel, transportation and production costs, potentially adding to inflationary pressures around the world.
The developments are particularly significant for major oil producers and consumers as traders assess whether the latest disruptions will be temporary or develop into a wider supply crisis.
