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

Oil prices climbed above $108 a barrel on Monday after drone strikes launched from Iraqi territory forced Saudi Arabia to shut down its east-west pipeline, a critical route used to bypass the closed Strait of Hormuz. Brent crude futures rose more than 3 percent to $108.23, while West Texas Intermediate reached $103.14, marking the latest spike driven by escalating violence in the Middle East tied to the ongoing U.S. and Israeli conflict with Iran.

The attacks damaged key sections of the 745-mile pipeline in the Riyadh and Medina regions, according to satellite imagery showing fire damage and blackened areas around pumping stations. Saudi authorities closed the line, which normally carries up to 7 million barrels per day, as a precaution. Traders warned that the kingdom's export stocks at the Red Sea port of Yanbu would last only five to seven days without reopening. The disruption comes after months of rerouting crude away from the Strait of Hormuz, through which roughly a fifth of global oil passes.

Iran-aligned Houthi forces in Yemen have added pressure by capturing Perim Island in the Bab al-Mandab strait and launching missile strikes on Saudi targets. These moves have reignited fighting in Yemen's civil war, displacing more than 82,000 people since early September. Iraq's government confirmed the drones originated from its soil and launched an investigation, amid growing pressure to curb Iran-backed militias operating from its territory.

President Donald Trump claimed the United States was regaining control of the Strait of Hormuz, with U.S. Energy Secretary Chris Wright stating that average flows had reached 10 million barrels per day over the past week. Iran disputed those assertions, and oil markets reflected continued tightness despite the administration's assurances. A diplomatic meeting between Iran and Gulf states scheduled for Monday in Oman was postponed, further dimming hopes for quick de-escalation.

The price jump has rippled into U.S. fuel costs, with diesel hitting a record above $6 a gallon. During a trip to Ireland, Trump urged Ukrainian President Volodymyr Zelenskyy to halt strikes on Russian oil refineries, arguing they were creating global diesel shortages unrelated to the Middle East conflict. Ukraine has described those facilities as legitimate military targets in its defense against Russian aggression.

Iranian forces separately claimed to have destroyed a U.S. MQ-1 drone over the Strait of Hormuz using a new air defense system, adding to the series of exchanges that have kept shipping lanes under strain. With no clear path to renewed talks and supply routes under repeated threat, analysts noted that any extension of the Saudi pipeline outage could quickly tighten markets further.