Oil prices jump over 2% as fresh Saudi, Strait of Hormuz strikes fuel supply fears

Oil prices surged over 2% on Monday as new Houthi strikes in Saudi Arabia and Iranian actions in the Gulf heightened supply worries following a key pipeline shutdown. Brent crude futures increased by $2.90, or 2.77%, to $107.51 per barrel, while US West Texas Intermediate (WTI) crude climbed $2.27, or 2.27%, to $102.32 per barrel. Prices had initially jumped more than 3% at the market open, with Brent rising $3.62, or 3.46%, to $108.23 per barrel and WTI going up $3.15, or 3.15%, to $103.20 per barrel.

Saudi state media reported damage to homes and a mosque in Jazan province after a Houthi attack, and the Iran-aligned Houthis claimed they targeted a Saudi military base in a neighboring province. Meanwhile, a vessel in the Strait of Hormuz was hit by a projectile, triggering a fire and forcing the crew to flee, according to the British maritime security agency UKMTO.

Iran reported one fatality and four wounded crew members after an Iranian commercial vessel was struck off its coast. The shutdown of the East-West oil pipeline on Friday due to a drone attack from Iraq, which carries up to 4% of global oil supply, added to the supply concerns. Yemen's Iran-aligned Houthis captured the strategic island of Perim on Friday, tightening their grip on the Bab el-Mandeb Strait, another vital oil transit route that carries 4-5% of global supply.

Oil prices have risen around 8% in the past week, reaching $100 per barrel for the first time since July as Middle East tensions escalate. The Strait of Hormuz, which once accounted for nearly one-fifth of the world's oil, remains at the center of the conflict, with both the US and Iran vying for control. Oman postponed a scheduled meeting with Iran and other regional nations on Monday to discuss managing shipping through the critical waterway, citing the need for consensus. No peace talks have been held since an interim agreement in June fell apart after a few weeks.