Global oil prices rose by more than 3% on Monday as fresh attacks in the Middle East, the temporary closure of a major Saudi pipeline and the postponement of diplomatic talks over the Strait of Hormuz heightened concerns about disruptions to crude supplies.
Brent crude futures gained $3.21, or 3.1%, to trade at $107.82 per barrel, while US West Texas Intermediate (WTI) crude rose $3.17, or 3.2%, to $103.22.
The latest increase followed the temporary shutdown of Saudi Arabia’s East-West oil pipeline after a drone attack. The pipeline is strategically important because it enables Saudi Arabia to transport crude to the Red Sea and reduce its dependence on the Strait of Hormuz for exports.
The disruption has raised concerns over global supplies, with analysts estimating that the pipeline’s closure could affect as much as 4% of global oil supply.
The market was further unsettled after a vessel was struck by a projectile in the Strait of Hormuz, forcing its crew to evacuate. Iranian authorities also reported that an Iranian commercial vessel was hit near its coast, leaving one person dead and four others injured.
The developments have increased fears that continued attacks around the region could restrict the movement of crude through some of the world’s most important energy routes.
Diplomatic efforts to ease tensions have also suffered a setback. Oman announced that a planned meeting between Iran and Gulf countries to discuss the security and future of the Strait of Hormuz had been postponed.
The delay has added to market uncertainty, as traders had hoped that negotiations could help reduce the risks surrounding one of the world’s key oil shipping routes.
The Strait of Hormuz remains particularly important to global energy markets because of the huge volume of oil transported through the waterway.
Meanwhile, attacks by Yemen’s Iran-aligned Houthis have also raised concerns around the Bab el-Mandeb Strait, another major route for international energy shipments.
Oil prices had already gained about 8% during the previous week, pushing Brent above the $100 mark for the first time since July. The latest surge has therefore intensified concerns about the impact of the regional conflict on fuel prices, transportation costs and inflation globally.
Market participants are now closely watching developments around the Strait of Hormuz, Saudi Arabia’s oil infrastructure and diplomatic efforts to prevent further escalation, as any prolonged disruption could put additional pressure on global crude supplies.
