By: OrePulse

Oil prices surged Monday after Yemen's Houthi forces claimed missile and drone strikes on a Saudi Arabian military base, and Iraq-based drones struck and forced the shutdown of Saudi Arabia's East-West Pipeline. This critical crude export route bypasses the Strait of Hormuz.

By midday, West Texas Intermediate had gained 2.16% to $103.10 a barrel, and Brent crude added 2.14% to $108.20 a barrel. Prices had climbed more than 3% at one point during early Asian trading.

The Houthi group, which has ties to Iran, said it carried out "a large-scale missile and drone attack" targeting a military base in Sharurah, Saudi Arabia, over the weekend. Saudi state media did not confirm that specific attack, though officials reported that a projectile had struck the Jazan region. The claimed strike followed a prior drone attack on Saudi Arabia's East-West Pipeline, reportedly launched from Iraq near the Iranian border, which Saudi officials described as the reason for a "precautionary" shutdown of the line.

The East-West Pipeline typically carries Saudi crude to export terminals at the Red Sea port of Yanbu, letting the kingdom sidestep the Strait of Hormuz chokepoint entirely. Multiple pumping stations along the pipeline reportedly sustained drone damage. Analysts warned that up to 4% of global oil supply could be disrupted if the pipeline remains shut for an extended period.

Shipping through the Strait of Hormuz itself has also thinned sharply. Vessel traffic through the strait fell to just 14 ships over the weekend, down from a 10-day average of 14 daily movements, with only four outbound vessels — including one Suezmax carrier — and ten inbound ships carrying bulk commodities and metals. The United Kingdom Maritime Trade Operations office reported separately that a vessel in the strait sustained damage from an unidentified projectile.

Shipowners and energy exporters have grown more cautious about transiting the strait as regional hostilities mount, including tanker strikes and threats to Saudi shipments in the Red Sea from Iran-aligned Houthi forces. The Houthi group's expanded territorial control in Yemen, including its recent seizure of Perim Island, has added to concerns over shipping through the Red Sea's Bab el-Mandeb Strait.

The disruption also delayed diplomacy aimed at easing the crisis. Oman's foreign minister announced the postponement of a Monday meeting between Gulf states and Iran intended to negotiate temporary arrangements for managing shipping through the Strait of Hormuz. The meeting would have been the first such diplomatic engagement since the broader regional conflict began.

The combination of a shuttered pipeline and a sharply thinned Hormuz shipping lane represents a dual disruption to Saudi export capacity. Under normal conditions, the East-West Pipeline gives Saudi Arabia an alternative outlet for crude that would otherwise need to transit Hormuz, reducing the kingdom's exposure to the strait. With the pipeline offline and traffic through the strait already reduced to a fraction of its recent average, a larger share of Saudi exports would need to rely on the constrained and increasingly contested Hormuz corridor if the closure persists.

Market participants are watching how long the East-West Pipeline remains offline, since a prolonged closure would force more Saudi crude through the already-congested and increasingly risky Hormuz route, compounding the supply pressure already reflected in Monday's price gains. The postponed Gulf-Iran talks also remove, for now, a potential diplomatic off-ramp that had been seen as a first step toward stabilizing shipping arrangements through the strait.

The events mark an escalation in a regional conflict that has already drawn in Yemen's Houthi forces, Iran-linked actors in Iraq, and Gulf states seeking to manage the fallout. Both the pipeline strike and the claimed attack on the Sharurah base occurred within days of each other, reinforcing traders' sense that the disruption to Saudi supply routes may not be an isolated incident.