Oil prices up nearly 3pc, with brent crude above $107 following new strikes on Saudi Arabia, Strait of Hormuz

Oil prices climbed nearly 3% on Monday, reaching a level above $107 per barrel following new strikes on Saudi Arabian energy infrastructure and Iranian attacks on ships in the Gulf. Brent crude futures surged $2.93, or 2.8%, to $107.54 per barrel, while WTI futures increased $2.88, or 2.9%, to $102.93 per barrel. This price surge follows a series of attacks on Saudi Arabian energy infrastructure, particularly the crucial East-West pipeline, which helps the country bypass the Strait of Hormuz for exports.

The pipeline's temporary shutdown, due to a drone attack, threatens up to 4% of global oil supply, with the Red Sea port of Yanbu having only a five to seven-day inventory for exports. Saudi state media released footage of damage from a Houthi attack in southern Jazan province, while the Houthis also claimed they struck a Saudi military base in a neighboring province.

Additionally, a vessel in the Strait of Hormuz was hit by a projectile, causing a fire and forcing crew evacuation. Iran reported one fatality and four wounded aboard an Iranian commercial vessel struck off its coast. Meanwhile, the Houthis reached the strategic island of Perim, tightening their control over the Bab el-Mandeb strait, another major oil transit lane responsible for 4-5% of global supply.

Oil prices surged 8% last week due to these disruptions, reaching above $100 for the first time since July. Omani Foreign Minister Badr Albusaidi announced the postponement of a scheduled Monday meeting in Oman between Gulf countries and Iran to discuss the Strait of Hormuz, as peace talks since the U.S.-led Israel conflict began six months ago have not resumed since the June interim agreement collapsed.