Oil prices soar over 4% to 16-week high after strikes on Saudi pipeline, ships in West Asia

Oil prices surged nearly 4% on Monday, reaching a 16-week high, following new attacks on Saudi energy infrastructure and vessels in the Middle East. Brent futures climbed $4.68, or 4.5%, to $109.29 per barrel, while U.S. West Texas Intermediate crude rose $4.21, or 4.2%, to $104.26. Both benchmarks were technically overbought for over a week, nearing their highest closes since May 19.

The Gulf Arab states canceled a meeting with Iran, while Yemen's Iran-backed Houthis launched fresh assaults on Saudi Arabia, targeting a military airbase and aircraft systems. Earlier, an attack on Saudi Arabia's east-west pipeline, which avoids the Strait of Hormuz, disrupted oil shipments and threatened up to 4% of global oil supply.

With the pipeline down, the Red Sea port of Yanbu must rely on storage for five to seven days of exports. Commodity vessel traffic through the Strait of Hormuz plummeted to single digits, significantly below its 10-day average of 14. While the price reaction appears contained, analysts warn that if the disruption persists beyond the five-to-seven-day inventory buffer, oil prices could spike dramatically.