Oil Prices Surge Over 2% as Attacks on Saudi Infrastructure Stoke Supply Fears

Oil prices rose sharply on Monday, driven by mounting concerns over energy supply stability following fresh attacks on Saudi Arabian infrastructure and maritime assets in the Middle East.

International benchmark Brent crude futures gained $2.72, or 2.6%, to trade at $107.33 per barrel, while U.S. West Texas Intermediate (WTI) crude increased $2.51, or 2.5%, to $102.56 as of 11:39 a.m. EDT, according to Reuters data. WTI was on pace for its highest closing price since May 19.

Geopolitical Tensions Escalate

The price rally follows several key developments that threaten to disrupt the flow of oil from the region. On Friday, an attack that Riyadh attributed to Iran-backed fighters in Iraq disabled Saudi Arabia's crucial east-west pipeline. This pipeline is a strategic alternative route that allows the kingdom to ship crude to the Red Sea, bypassing the Strait of Hormuz.

Further escalating tensions, Yemen's Iran-aligned Houthis claimed responsibility for launching missiles and drones at a Saudi military airbase. The group has also reportedly tightened its control over the Bab el-Mandeb strait, another critical chokepoint for global maritime trade, after reaching the island of Perim on Friday.

Market Impact and Supply Outlook

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The disruption to the east-west pipeline is particularly significant, as it threatens up to 4% of global oil supply, according to the source report. With the pipeline out of service, the Red Sea port of Yanbu is now dependent on stored inventories, which industry sources estimate can cover exports for only five to seven days.

"The relatively contained price reaction suggests the market still expects Saudi inventories to cushion exports in the near term, but if the disruption extends beyond the five-to-seven-day inventory cushion, that could change quickly," said Janiv Shah, an oil markets analyst at Rystad, as quoted by Reuters.

Reflecting the heightened risk, preliminary ship tracking data showed that vessel transits through the Strait of Hormuz—through which about a fifth of the world's oil passed before recent conflicts—dropped to single digits over the weekend, well below the 10-day average of 14.

Mitigating Factors

Prices pared some of their earlier gains, which had seen futures jump as much as 4%. The pullback occurred after U.S. President Donald Trump commented that Iran wants to make a deal and that Russia and Ukraine had purportedly agreed not to target each other's energy infrastructure, slightly easing broader market anxieties.