Oil Prices Soar as Saudi Strikes and Strait of Hormuz Attacks Compound Supply Fears

Oil prices surged more than 2% on Monday after new strikes on Saudi Arabia and attacks on ships in the Gulf added to supply concerns. The East-West oil pipeline, a key route for Saudi exports, was shut down by a drone strike that originated in Iraq.

The Houthi rebels claimed responsibility for the attack on a Saudi military base in Jazan province, while Iranian state media reported one person killed and four crew members wounded aboard an Iranian commercial vessel struck off its coast. A British maritime security agency also confirmed that a vessel in the Strait of Hormuz was struck by a projectile.

The losses of the pipeline and control over key oil transit lanes threaten up to 8% of global oil supply, with Brent crude futures rising $2.90 (2.77%) to $107.51 per barrel and WTI futures increasing $2.27 (2.27%) to $102.32 per barrel.

IG market analyst Tony Sycamore warned that unless this week's talks in Oman produce a solution, crude oil prices may continue to rise towards the $119.48 high of early March.