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

Oil prices climbed above $108 a barrel on Monday after drone strikes forced Saudi Arabia to shut its east-west pipeline, cutting off a route that had been carrying roughly 4 million barrels a day around the closed Strait of Hormuz. Brent crude rose more than 3 percent, extending a 9 percent gain from the prior week, while U.S. West Texas Intermediate futures reached $103.14. The surge reflects immediate supply risks rather than long-term scarcity, yet it underscores how overlapping conflicts in the Middle East are compressing available export capacity.

Saudi authorities closed the 745-mile Petroline after drones launched from Iraqi territory struck pumping stations in the Riyadh and Medina regions. Satellite imagery showed fire damage and blackened areas around one station. Riyadh has used the line since the start of the U.S.-Israel conflict with Iran to reroute exports away from the Hormuz chokepoint. With the pipeline offline, stocks at the Red Sea port of Yanbu can support exports for only five to seven days, according to traders. Iraq’s government confirmed the launches originated on its soil and launched an investigation into Iran-aligned militias operating there.

At the same time, Iran-backed Houthi forces in Yemen seized Perim Island and advanced on the Bab al-Mandab strait, threatening the southern approach to the Red Sea. Saudi-backed Yemeni government troops responded with strikes aimed at dislodging the Houthis from Mokha and Perim. The fighting has displaced more than 82,000 people since early September, according to the U.N. migration agency. The Houthis declared a blockade on Saudi vessels in July while allowing other commercial traffic to continue, though the group has also fired missiles into Saudi territory.

U.S. officials maintain that traffic through Hormuz is recovering. Energy Secretary Chris Wright said average flows reached 10 million barrels a day over the past week, or about two-thirds of pre-conflict levels. President Trump described American forces as escorting tankers and asserted “total control” of the strait. Iranian officials disputed those assessments, and a planned diplomatic meeting between Iran and Gulf states in Oman was postponed after the pipeline attack. One additional tanker was reported on fire in the strait on Sunday.

The price reaction so far has been measured because Saudi inventories have cushioned the immediate loss. Analysts at Rystad Energy noted that a longer outage would tighten markets more sharply. Diesel prices in the United States have already hit record levels above $6 a gallon, a development Trump attributed in part to Ukrainian strikes on Russian refineries. He urged Ukrainian President Volodymyr Zelensky to avoid targeting fuel infrastructure, saying the resulting shortages affect global supplies.

The cumulative disruptions—Hormuz restrictions, the Saudi pipeline closure, and Houthi gains in the Red Sea—have removed several million barrels of flexible supply from world markets at a moment when diplomacy has stalled. Gulf producers have limited short-term options to reroute volumes, and any extension of the current outages would push prices higher before new diplomatic or military arrangements can restore flows.