Oil prices climbed further on Tuesday as a new wave of Houthi missile and drone attacks on Saudi Arabia intensified concerns over crude supplies already constrained by damage to the kingdom’s East-West pipeline and sharply reduced shipping through the Strait of Hormuz.Brent crude futures rose $1.37, or 1.3%, to $107.05 a barrel in Asian trading, while US West Texas Intermediate gained $1.53, or 1.5%, to $102.92. Both benchmarks had advanced more than 1% on Monday as traders assessed the risk of prolonged disruption to Saudi export routes.
The latest escalation followed Houthi attacks on the King Khalid Air Base at Khamis Mushait in southern Saudi Arabia. The group said it fired dozens of missiles and drones at hangars, radar installations, runways and ammunition depots in retaliation for Saudi air strikes in Yemen.
Saudi-led coalition spokesman Major General Turki al-Malki said the attacks struck civilian areas in Khamis Mushait and nearby cities, injuring 13 civilians and damaging houses and vehicles. Saudi authorities issued emergency alerts across several southern areas before lifting warnings after the immediate threat had passed.
The attacks have added pressure to an energy system already strained by the shutdown of Saudi Arabia’s 1,200-kilometre East-West pipeline. The conduit carries crude from fields and processing centres in the east to the Red Sea port of Yanbu, allowing exports to bypass the Strait of Hormuz.
The pipeline was taken offline after a drone strike last week that Riyadh and Baghdad said originated from Iraq, where Iran-backed armed groups operate. Saudi authorities have not publicly given a timetable for a full restart. Regional officials briefed on the damage have said substantial repairs could take three to five weeks, although limited flows may be possible during that period.
The pipeline had been moving roughly 2.6 million to 4 million barrels a day since late August, according to energy-sector estimates. Traders say a complete and prolonged outage could remove the equivalent of about 4% of global oil supply from readily available export routes if Gulf shipping remains severely restricted.
Pressure is also building around the Strait of Hormuz, the Gulf’s principal maritime outlet. Commodity-vessel traffic has fallen to a fraction of normal levels as attacks, mine risks and military activity deter commercial shipping. Before the wider conflict, the strait handled roughly one-fifth of global oil supplies.
Shipping data underscored the squeeze. Only four commodity vessels crossed Hormuz on Monday, down from 10 a day earlier and far below the pre-war average of about 125 daily transits, while Bab el-Mandeb traffic also weakened as security conditions deteriorated.
Saudi Arabia has increasingly relied on its western export system to keep crude moving while Hormuz traffic remains constrained. That has made the East-West pipeline and Yanbu more important to global buyers, particularly as shipping risks have spread towards the Red Sea and Bab el-Mandeb.
Houthi forces have also expanded along Yemen’s western coast and captured strategic positions near the Bab el-Mandeb, including islands that overlook approaches to the narrow passage linking the Red Sea with the Gulf of Aden. The gains have increased security concerns for commercial vessels using routes between Asia, the Middle East and Europe.
Saudi and Yemeni forces have responded with air strikes against Houthi positions, including targets around Yemen’s Red Sea coast. The Houthis, aligned with Iran, have maintained that their strikes on Saudi targets are retaliation for Saudi military action in Yemen.
Diplomatic efforts to reduce the immediate risk to energy flows have also stalled. Gulf Arab states postponed planned discussions with Iran on measures aimed at easing tensions around the Strait of Hormuz, diminishing expectations of a near-term improvement in shipping conditions.
Oil traders are consequently attaching a larger risk premium to every attack affecting pipelines, ports, tankers or military facilities near major export corridors. Market analysts say prices are likely to remain highly sensitive to evidence that Saudi pipeline flows are resuming or that commercial traffic through Hormuz is recovering.
Topics
World