Houthis Seize Strategic Island, Further Disrupting Global Oil Supplies

The conflict in the Middle East escalated as Yemen's Iran-aligned Houthis seized control of the strategic island of Perim in the Bab el-Mandeb Strait, a key global shipping route. This move has raised concerns that Houthi backer Iran could gain a significant advantage in its war with the US by controlling another major oil transit point.

Saudi Arabia's East-West oil pipeline was also attacked by a drone coming from Iraq, further disrupting oil flows at a time when diplomatic efforts to ease tensions have stalled. The pipeline has been shipping 4-5 million barrels per day, amounting to about 4-5% of global supply.

The Houthi advances have put pressure on Gulf oil exports and driven up oil prices, with Brent futures trading around $US105 a barrel. The conflict has already resulted in significant losses for Saudi Arabia, including the shutdown of its vital East-West pipeline.