Crude Oil Prices Climb More Than 2% Amid Growing Mideast Supply Fears

Oil prices surged more than two percent on Monday after fresh Houthi strikes on Saudi Arabia and Iranian attacks on vessels in the Gulf added to mounting supply worries following the shutdown of a major Saudi pipeline.

Brent crude climbed 2.77 percent to 107.51 dollars a barrel, while US crude rose 2.27 percent to 102.32 dollars, having jumped more than three percent at the market open before easing slightly.

Saudi state media released footage on Sunday showing damage to homes and a mosque from what it described as a Houthi strike on the southern Jazan province, while the Houthis also claimed to have hit a Saudi military base in a neighboring area. Separately, the British maritime security agency UKMTO reported that a vessel in the Strait of Hormuz was struck by a projectile, catching fire and forcing its crew to evacuate. Iran said a separate strike on one of its commercial vessels off its coast killed one crew member and wounded four others.

Prices had already been expected to climb after Saudi Arabia’s East-West pipeline, which allows the kingdom to route exports around the Strait of Hormuz, was shut down Friday following a drone strike launched from Iraq. The pipeline’s loss threatens as much as four percent of global oil supply. Compounding the pressure, Houthi forces aligned with Iran reached the strategic island of Perim on Friday, tightening their grip on the Bab Al-Mandab Strait, another corridor that has carried four to five percent of global supply in recent months.

Taken together, the disruptions pushed oil up eight percent over the week, lifting prices above 100 dollars a barrel for the first time since July. IG market analyst Tony Sycamore said that unless this week’s talks in Oman produce something concrete, or the pipeline is restored quickly, crude could keep climbing toward the 119.48 dollar high reached in early March.

Those talks now look less certain. Omani Foreign Minister Badr Albusaidi said Sunday that a planned Monday meeting between Gulf states and Iran over the Strait of Hormuz had been postponed. No peace negotiations have taken place in the six-month-old conflict, launched by the United States and Israel, since an interim agreement collapsed just weeks after it was reached in June.

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