Oil prices jump over 3% on more M.East action, Hormuz meeting delay

Oil prices surged over 3% on Monday after additional attacks by the Houthi group in the Middle East heightened concerns over potential supply disruptions in the region. The delays in planned talks between Iran and other Persian Gulf nations regarding Hormuz further increased anxiety and boosted oil's risk premium, causing crude to approach annual highs.

Brent oil futures soared by up to 3.5% to $108.41 per barrel before easing slightly to $107.51 per barrel by 19:13 ET (23:13 GMT). The escalation was primarily driven by the Houthi group, aligned with Iran, launching more attacks on Saudi targets over the weekend. These strikes included an Aramco refinery, fuel terminal, fuel plants, airports, and ships in the Bab el-Mandeb strait, which blocks an important oil supply route.

Saudi Arabia subsequently shut an essential East-West pipeline in response. The ongoing attacks have effectively eliminated the option for Saudi Arabia to utilize western exports if the Strait of Hormuz remains unstable, likely contributing to further upward pressure on oil prices during the week. Additionally, a scheduled regional meeting between Iran and Gulf powers, initially set for Monday, has been postponed, causing markets to reassess their expectations for diplomacy's ability to curb supply disruptions.

This postponement has kept Hormuz at risk of continuous conflict, potentially affecting oil supplies through the channel, which had already slowed to a fraction of pre-war levels following renewed tensions between the U.S. and Iran in August.