Oil prices jump as new Gulf attacks deepen supply fears

Oil prices jumped more than 3% at Monday's market open as fresh attacks on Saudi Arabia and a vessel in the Strait of Hormuz deepened concerns over global energy supply already rattled by the shutdown of a critical Saudi pipeline.

Brent crude initially rose $3.62, or 3.46%, to $108.23 per barrel, while WTI futures climbed $3.15, or 3.15%, to $103.20 per barrel, according to Reuters. Prices later pared some gains, with Brent trading up about 2.8% and WTI up roughly 2.9% by midday in Asia.reuters

Weekend Attacks Across the Gulf

Saudi Arabian state media on Sunday released video footage of damage to homes and a mosque in the kingdom's southern Jazan province, attributing the strike to Yemen's Houthi forces. The Houthis said they had also struck a Saudi military base in a neighboring province.channelnewsasia+1

Separately, the British maritime security agency UKMTO reported that a vessel in the Strait of Hormuz was struck by a projectile on Sunday, causing a fire and forcing the crew to evacuate. Iran said one person was killed and four crew members were wounded aboard an Iranian commercial vessel struck off its coast.reuters+1

Pipeline Shutdown Threatens Global Supply

The attacks compounded supply fears already building after Saudi Arabia's East-West oil pipeline was shut on Friday following a drone strike that originated from Iraq. The pipeline, which allows Saudi Arabia to reroute exports around the Strait of Hormuz to the Red Sea port of Yanbu, threatens up to 4% of global oil supply while offline. With the pipeline out of service, Yanbu has enough inventory to cover just five to seven days of exports, according to three industry sources cited by Reuters.reuters

Yemen's Iran-aligned Houthis reached the strategic island of Perim on Friday, tightening their control over the Bab el-Mandeb Strait, another key oil transit lane that has been carrying 4% to 5% of global supply. Oil surged 8% last week due to the disruptions, rising above $100 for the first time since July.reuters

Diplomacy Stalls as Prices Climb

A scheduled Monday meeting in Oman between Gulf countries and Iran to discuss the Strait of Hormuz has been postponed, Omani Foreign Minister Badr Albusaidi said on X on Sunday. No peace talks have been held on the war, launched six months ago by the United States and Israel, since an interim agreement in June collapsed.channelnewsasia+1

"Unless this week's talks in Oman produce something operational — or the East-West pipeline is brought back online quickly — the risk is that crude oil continues to extend its gains toward the $119.48 high of early March," IG market analyst Tony Sycamore said in a note on Sunday.reuters+1