Oil Prices Top $108 as Saudi Pipeline Shuts After Drone Strikes

Oil markets reacted sharply to a series of attacks that closed a key Saudi Arabian pipeline and heightened risks around two major shipping routes. Brent crude climbed above 108 dollars a barrel on Monday after drones struck the east-west pipeline that carries crude from the Persian Gulf coast to the Red Sea port of Yanbu. The line normally moves up to 7 million barrels a day and has been used to avoid the Strait of Hormuz since fighting between the United States and Iran began earlier this year. Saudi officials said stocks at Yanbu would last only five to seven days if the pipeline remained closed.

The attacks originated from Iraqi territory, according to Baghdad, which ordered an investigation into militant groups operating there. Saudi authorities reported injuries and fire damage at pumping stations, confirmed by satellite imagery showing blackened areas around one facility. At the same time, Houthi forces in Yemen seized Perim Island and the port of Mokha at the entrance to the Bab al-Mandab Strait, expanding their reach over another critical waterway. These moves added pressure on shipping already strained by earlier incidents in the Strait of Hormuz.

US officials maintained that traffic through Hormuz had recovered to roughly two-thirds of normal levels, with about 10 million barrels a day moving in recent days. Energy Secretary Chris Wright described markets as tighter than preferred but not critically so. President Trump said American forces were escorting tankers and asserted control over the strait. Iran disputed those claims and separately announced it had shot down a US MQ-1 drone over the waterway. A diplomatic meeting scheduled in Oman between Iran and Gulf states to discuss the situation was postponed.

The price spike extended to refined products. US diesel prices reached a record above 6 dollars a gallon. During a visit to Ireland, Trump urged Ukrainian President Volodymyr Zelenskyy to halt strikes on Russian oil refineries and diesel facilities, arguing that those attacks were creating shortages unrelated to Middle East supply problems. Ukraine has treated the refineries as military targets in its conflict with Russia.

Market analysts noted that Saudi inventories had so far cushioned the immediate impact of the pipeline closure, but any extension beyond the reported five-to-seven-day buffer would likely drive prices higher. Global supply has already tightened this year because of the broader conflict, which has displaced shipping and prompted rerouting around affected chokepoints. The combined effect of pipeline damage, strait tensions, and separate disruptions in Russian refining capacity has raised costs for fuel across multiple regions without a clear near-term resolution in sight.