Houthi Attacks Send Oil Prices Soaring on Global Supply Fears

Oil prices surged on Monday as Houthi rebels intensified their attacks on Saudi Arabia's energy infrastructure, threatening global supply. Brent crude benchmark futures jumped over 2% to reach $106.72 per barrel, while West Texas Intermediate (WTI) climbed to $102.15.

The closure of the East-West pipeline following a drone attack put approximately 4% of worldwide oil production at risk. The pipeline serves as a vital backup transport corridor for Saudi Arabia to ship crude oil bypassing the Strait of Hormuz entirely. Yanbu port facilities have sufficient stored crude reserves to sustain only five to seven days of continued shipments.

The Houthi forces captured Perim island, strengthening their strategic position over the Bab el-Mandeb waterway. This narrow passage has been transporting between 4% and 5% of global petroleum output in recent weeks. The Strait of Hormuz security discussions between Iran and Gulf states have been delayed without a new date.

Commodity analysts from ING observed that the assaults on Saudi energy assets represented a significant intensification, although the complete scope of infrastructure damage and the anticipated duration of the pipeline's inoperability remained undetermined. Energy markets had been monitoring these diplomatic efforts closely, as optimism surrounding potential dialogue had temporarily moderated crude's upward trajectory during the prior week.