Key Highlights
- Brent crude futures advanced 2% to reach $107.83 per barrel; WTI increased 2.1% to $103.50 on Tuesday’s trading session
- Houthi forces captured Perim Island in the Bab al-Mandeb Strait following their takeover of Mokha port
- Saudi Arabia’s critical East-West Pipeline remains shut down, with complete restoration requiring six to eight weeks
- Negotiations between Iran and Gulf nations regarding Strait of Hormuz access have been postponed without a rescheduled date
- Market experts caution that worldwide crude stockpiles may provide coverage for merely five to eleven weeks
Oil prices surged beyond the $107 per barrel threshold on Tuesday as renewed Houthi military operations targeting Saudi Arabia and significant pipeline infrastructure damage sustained elevated supply anxieties throughout international crude markets.
Brent crude futures climbed 2.0% to settle at $107.83 per barrel during early European market hours. West Texas Intermediate registered a 2.1% gain, reaching $103.50 per barrel. Both benchmark indicators temporarily achieved higher valuations on Monday, with Brent momentarily reaching $109.80 before experiencing a retreat.
Critical Pipeline Outage Intensifies Supply Strain
Saudi Arabia’s East-West Pipeline was forced offline following Houthi strikes conducted last week that inflicted damage on essential pumping facilities. The 750-mile infrastructure system possesses the capacity to transport up to 7 million barrels daily from Saudi Arabia’s eastern regions to the Red Sea terminal at Yanbu.
Saudi officials are attempting to reinstate limited operations within coming days. Nevertheless, comprehensive repairs addressing the compromised stations may require six to eight weeks, based on reporting from the Wall Street Journal.
This pipeline serves as a critical alternative route enabling Saudi crude shipments to circumvent the Strait of Hormuz. Its operational suspension eliminates a principal safeguard against supply interruptions throughout the region.
Saudi crude shipments departing from Yanbu had exceeded 4 million barrels daily between April and June. That volume plummeted to merely 1.1 million barrels per day by August as escalating Houthi attacks amplified hazards to Red Sea maritime traffic, based on LSEG tracking data.
Rystad Energy’s analyst Janiv Shah calculates that Saudi Arabia maintains approximately two to six days worth of crude reserves stored at Yanbu facilities. Accessing additional reserves positioned in Egypt could potentially extend that timeframe by at least one additional week.
Houthi Forces Consolidate Control Over Strategic Maritime Passage
Iran-backed Houthi militants took control of Perim Island within the Bab al-Mandeb Strait during the weekend following their conquest of the adjacent Mokha port. These territorial advances provide the organization with enhanced capability to interrupt petroleum shipments traversing the Red Sea corridor.
Market analysts at ING indicated that oil valuations maintain solid support and this baseline is improbable to deteriorate until markets obtain more definitive information regarding Saudi supply following the pipeline closure.
Diplomatic discussions between Iran and Gulf state representatives concerning the reopening of the Strait of Hormuz have experienced postponement. Oman revealed over the weekend that a scheduled Monday conference had been deferred. Officials provided no alternative scheduling date.
The Strait of Hormuz previously facilitated approximately one-fifth of global oil movement before the U.S.-Iran conflict commenced in late February. Transportation volumes have remained substantially beneath those historical levels since the strait was effectively closed following the outbreak of hostilities.
Commonwealth Bank of Australia’s analyst Vivek Dhar noted that elements which previously buffered the market are diminishing in effectiveness. China’s crude purchasing activity is gradually increasing, and supplementary non-OPEC production outside the Middle East region is not anticipated until 2027.
Dhar emphasized that CBA’s conservative projection, indicating global inventories provide coverage for only five to eleven weeks of consumption, is becoming progressively more probable.
U.S. President Donald Trump reiterated on Monday that Iran was pursuing a peace agreement. Tehran rejected this assertion, stating it would not participate in negotiations until its specified conditions were satisfied.
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