Oil prices soared on Sunday after Saudi Arabia shut down a vital pipeline that bypasses the Strait of Hormuz.
us west texas intermediate Futures were up 2.8% at $102.87 a barrel by 6:27 p.m. ET. brent International benchmark crude oil rose 3.1% to trade at $107.87 a barrel.
On Thursday, a drone launched from Iraq damaged an East-West pipeline, forcing the Saudi government to shut down a vital oil artery. Riyadh has not disclosed how bad the damage to the pipeline is or how long it will remain closed.
A diplomatic meeting between Iran and Gulf Arab states to discuss the situation in Hormuz was originally scheduled to be held in Oman on Monday, but was abruptly postponed following the pipeline attack.
“Out of respect for the agreement, the regional meeting scheduled for tomorrow in Salalah has been postponed,” Omani Foreign Minister Badr al-Busaidi said in a social media post on Sunday. “We remain committed to promoting dialogue that supports regional stability and lasting cooperation.”
The security situation in Hormuz remains unstable, with another tanker attacked on Sunday and a large fire breaking out on board, the UK Maritime Trade Operations Center said.
The Saudi pipeline, which can transport 7 million barrels a day, has played a key role in easing severe oil supply disruptions caused by the Iran war. It traverses the kingdom from east to west, connecting oil-producing regions near the Persian Gulf with export terminals on the Red Sea coast.
As Iran and the United States vie for control of the Strait of Hormuz, Saudi Arabia has relied on pipelines to move oil exports out of the Gulf. Saudi Aramco CEO Amin Nasser said in an August earnings call that the pipeline plays a more important role in stabilizing the oil market than the large-scale release of strategic stockpiles led by the United States.
Saudi Arabia has faced an escalation in attacks by Iranian-aligned militants in recent days. Yemen’s Houthi militants attacked Saudi energy facilities and other civilian assets early last week, injuring more than 70 people, according to Saudi state media.
The Houthis reportedly captured the port city of Mokha on Yemen’s west coast, and then the strategic island of Perim in the Bab el-Mandeb Strait. This advance would give the insurgents a strong position to cut off the flow of oil through the Bab el-Mandeb River, which connects the southern Red Sea to world markets.
The Houthis declared a maritime embargo on Saudi Arabia in July.
