Oil prices rose sharply early Monday as fresh Houthi attacks on Saudi Arabia and renewed strikes around the Strait of Hormuz heightened fears of further disruption to crude supplies from the Middle East.
Brent crude futures climbed as much as 3.5 percent to $108.41 a barrel before paring gains slightly to trade around $107.51, keeping the benchmark close to its annual highs as traders priced in a higher geopolitical risk premium.
The latest rally came after Yemen’s Iran-aligned Houthi group stepped up attacks on Saudi targets over the weekend, raising concerns that disruptions could spread across multiple strategic routes through which Middle Eastern oil reaches international markets.
The attacks have also compounded uncertainty around the Strait of Hormuz, one of the world’s most important oil shipping chokepoints, where renewed hostilities and disruptions have already reduced flows significantly.
Saudi export routes face fresh pressure
Saudi Arabia reportedly shut a crucial East-West pipeline following the latest Houthi attacks, adding another layer of concern for oil traders already monitoring the security of regional energy infrastructure.
The Houthis reportedly targeted several locations in Saudi Arabia over the weekend, including key energy facilities, following attacks last week on major Saudi targets.
Those earlier attacks included an Aramco refinery and fuel terminal, as well as fuel plants, airports and shipping interests around the Bab el-Mandeb Strait.
The escalation is particularly significant for global oil markets because the Bab el-Mandeb provides an alternative route for Saudi crude shipments when traffic through Hormuz is disrupted.
Analysts at ANZ said the latest developments could leave Riyadh with fewer options for maintaining exports if conditions around Hormuz deteriorate further.
“Riyadh has now lost the option to use western exports if the Strait of Hormuz deteriorates again,” ANZ analysts said in a note, adding that this was likely to put further upward pressure on oil prices during the week.
The combination of attacks on energy infrastructure and restrictions on alternative export routes has therefore increased concerns that a prolonged disruption could tighten physical crude supplies.
Iran-Gulf talks delayed
Adding to market anxiety, diplomatic efforts aimed at easing tensions around the Strait of Hormuz suffered a setback after Oman’s Foreign Minister Sayyid Badr Albusaidi said on Sunday that a regional meeting involving Iran and Gulf states had been postponed.
The meeting, which had been scheduled for Monday, had previously helped temper oil-market gains as traders anticipated that renewed diplomacy could reduce the risk of prolonged supply disruptions.
Its postponement has instead left the future of negotiations uncertain and reinforced expectations that Hormuz will remain a major geopolitical flashpoint in the near term.
Oil shipments through the strategic waterway had already fallen to a fraction of pre-war levels following renewed U.S.-Iran hostilities in August, according to the report.
