Oil Prices Rise More Than 2% as Gulf Attacks Deepen Supply Concerns

Oil prices climbed more than 2 per cent on Monday as fresh attacks by Yemen’s Houthi movement on Saudi Arabia and strikes on vessels in the Gulf increased concerns about global crude supplies.

Brent crude futures rose $2.90, or 2.77 per cent, to $107.51 a barrel by 2313 GMT. US West Texas Intermediate crude gained $2.27, or 2.27 per cent, to $102.32 a barrel. Prices had risen by more than 3 per cent shortly after markets opened.

The latest gains came after Saudi Arabia reported damage to homes and a mosque in its southern Jazan province following what state media described as a Houthi attack. The Iran-aligned group also said it had targeted a Saudi military base in a neighbouring province.

Tensions around the Strait of Hormuz added to concerns about the security of oil shipments. The British maritime security agency UKMTO said a vessel in the strait was struck by a projectile on Sunday, causing a fire and forcing its crew to evacuate.

Iran separately said one person was killed and four crew members were wounded when an Iranian commercial vessel was struck off the country’s coast.

Markets had already been preparing for higher oil prices following the closure of Saudi Arabia’s East-West oil pipeline on Friday after a drone strike originating from Iraq, according to the reports.

The pipeline is strategically important because it allows Saudi Arabia to transport oil to ports on the Red Sea, reducing its reliance on the Strait of Hormuz. Its closure could affect supplies equivalent to as much as 4 per cent of global oil consumption.

Further risks emerged around the Bab Al-Mandab Strait after the Houthis reached the strategic island of Perim on Friday. The waterway is an important route for oil shipments and has carried about 4 to 5 per cent of global oil supplies in recent months.

The latest disruptions pushed oil prices about 8 per cent higher over the week and above $100 a barrel for the first time since July.

Tony Sycamore, an analyst at IG, said prices could continue rising if diplomatic efforts fail to produce an agreement or the Saudi pipeline is not quickly restored.

He said crude could move towards the $119.48 high recorded in early March if supply concerns persist.

Diplomatic efforts also faced a setback on Sunday. Omani Foreign Minister Badr Albusaidi said on X that a planned Monday meeting in Oman between Gulf states and Iran to discuss the Strait of Hormuz had been postponed.

The development came as the broader conflict entered its seventh month. No peace talks have been held since an interim agreement reached in June collapsed after several weeks, leaving markets vulnerable to further disruptions in the region.