First Thing: Oil prices surge as attacks on Saudi Arabia stoke supply fears

Good morning. Oil prices have surged above $108 a barrel following drone attacks from Iraq that forced Saudi Arabia to close its east-west crude pipeline. Saudi traders warned the kingdom would run out of export oil stocks if it failed to reopen the pipeline within days. Gas prices also rose. Energy prices have climbed this year as the US-Israel war with Iran has disrupted supply across the Middle East.

The attack came as Iran-aligned Houthi forces in Yemen launched assaults against Saudi Arabia and seized the strategic island of Perim in the Bab al-Mandab strait, expanding their control of the waterway. The strike on the kingdom's pipeline could impact 4% of global oil supply. Riyadh has ramped up use of the 745-mile pipeline since the start of the Iran war to bypass the Hormuz strait's closure, rerouting about 4 million barrels a day – around 4% of global supply.

With the pipeline offline, the Red Sea port of Yanbu has stocks to sustain exports for just five to seven days.