LONDON: A fresh wave of attacks across key Middle East energy routes sent oil prices more than 2% higher Monday, as traders weighed growing threats to crude supplies after a major Saudi pipeline was shut down.
Brent crude futures rose $2.90, or 2.77%, to $107.51 a barrel as of 2313 GMT, while U.S. West Texas Intermediate futures gained $2.27, or 2.27%, to $102.32. Both benchmarks initially climbed more than 3% after markets opened.
Saudi state media released footage Sunday showing damage to homes and a mosque in southern Jazan province following what it said was a Houthi attack. The Houthis also claimed to have targeted a Saudi military base in a neighboring province.
In the Strait of Hormuz, a vessel was struck by a projectile, causing a fire and forcing its crew to evacuate, the British maritime security agency UKMTO said.
Iran said one person was killed and four crew members were wounded after an Iranian commercial vessel was struck off its coast.
The attacks followed the closure of Saudi Arabia’s East-West oil pipeline after a drone strike Friday that originated in Iraq.
The 1,200-kilometer pipeline allows Saudi Arabia, the world’s largest oil exporter, to transport crude while bypassing the Strait of Hormuz. Its shutdown threatens up to 4% of global oil supply.
Another concern is the Bab al-Mandab Strait, a key oil shipping route connecting the Red Sea with the Gulf of Aden.
Yemen’s Iran-aligned Houthis reached the strategic island of Perim on Friday, potentially strengthening their position near the waterway. The route has carried about 4% to 5% of global oil supplies in recent months.
Oil prices gained about 8% last week, pushing crude above $100 a barrel for the first time since July.
IG market analyst Tony Sycamore said prices could move higher if the Saudi pipeline remains offline or diplomatic efforts fail to produce results.
“Looking ahead, unless this week's talks in Oman produce something operational or the East-West pipeline is brought back online quickly the risk is that crude oil continues to extend its gains toward the $119.48 high of early March,” Sycamore said in a note Sunday.
Diplomatic efforts also faced a setback after Omani Foreign Minister Badr Albusaidi said Sunday that a meeting scheduled for Monday between Gulf countries and Iran had been postponed.
The meeting was expected to address tensions around the Strait of Hormuz, a vital route for global energy shipments.
The broader conflict, which began six months ago with U.S. and Israeli military action, has seen no new peace talks since an interim agreement reached in June collapsed after several weeks.
Further attacks on energy infrastructure or shipping could keep crude prices elevated and increase pressure on global markets.
