Iraqi Pipeline Attack Sparks Global Oil Price Concerns Amid Yemen Conflict
The Iraqi government is racing to contain the fallout after local Iran-backed militias were accused of attacking and shuttering a key Saudi pipeline. The attack has sparked concerns about global oil prices, already inflated by the six-month Iran-U.S. war.
The incident occurred on Friday when Saudi Arabia shut down the major, cross-country East-West pipeline as a precautionary measure after it came under drone attack. Iraq's government confirmed the attacks had originated from its territory and pledged to investigate. The country is under mounting pressure to prevent local militias from aiding other Iran proxy groups across the region.
The investigation comes amid a surge in fighting between the Houthis and Saudi-backed coalition forces in Yemen, with the Houthis seizing an island in the Bab el-Mandeb Strait on Friday. This key shipping lane passes through which around 12% of global trade, including vital commercial lanes for Saudi oil. The strait has become a crucial route for Saudi oil exports since the Iran war disrupted shipping in the Strait of Hormuz.
The Iraqi government has set a Sept. 30 deadline for non-state groups to disarm, but several powerful militias have said they will not comply. This development raises concerns about potential retaliation from Saudi Arabia or other regional powers. U.S. President Donald Trump attempted to calm concerns on Saturday, stating, 'Everything will work out just fine. It’s all going to work out fine.'