Oil prices surge as Saudi pipeline shutdown fans Middle East supply fears

Saudi pipeline closure drives the price spike

Saudi Arabia closed its East-West crude oil pipeline after drones launched from Iraq damaged the artery, removing a key route that bypasses the Strait of Hormuz. Riyadh has not disclosed the extent of the damage or how long the line will remain shut. The pipeline has capacity of 7 million barrels per day and had played a central role in cushioning supply losses tied to the Iran war by linking Gulf production zones to Red Sea export terminals.

Benchmarks extend gains past the $100 threshold

Brent crude for November delivery rose 2.8 percent to $107.54 a barrel, while the U.S. West Texas Intermediate contract for October added 2.3 percent to $102.34, according to figures cited in the session. Brent later traded 3.1 percent higher at $107.87 and WTI 2.8 percent higher at $102.87 in U.S. evening trade. Both benchmarks extended last week's move back above $100.

Houthi seizure of a Red Sea island adds a second disruption risk

Separately, Iran-backed Houthis took control of an island overlooking the Bab el-Mandeb Strait, a chokepoint for Red Sea maritime traffic. The development compounds pressure on global supplies already strained by the Saudi pipeline outage and broader regional tensions.

Hormuz security deteriorates and diplomacy is delayed

The United Kingdom Maritime Trade Operations Center reported another tanker came under attack on Sunday, causing a severe fire onboard, underscoring continued instability around the Strait of Hormuz. A diplomatic meeting between Iran and Gulf Arab states on the Hormuz situation, originally set for Monday in Oman's Salalah, was abruptly postponed after the pipeline attack. Omani Foreign Minister Badr Albusaidi said the gathering was deferred "in the interests of consensus" and that Oman "remain[s] committed to fostering dialogue that supports stability and lasting cooperation in our region."

Pipeline status and diplomatic calendar now in focus

Saudi authorities have yet to indicate when the East-West pipeline will return to service or to quantify the damage from Thursday's drone strikes. The postponement of the Iran-Gulf meeting in Salalah leaves the next diplomatic step on Hormuz unspecified, while continued attacks on shipping near the strait set the near-term risk backdrop for crude.