Oil tops $107 as Saudi pipeline shutdown deepens supply fears

Diplomatic efforts to resolve tensions over the Strait of Hormuz faltered on Monday as Oman postponed a planned meeting between Iran and Gulf states, Reuters reported. The cancellation of the meeting dealt a blow to efforts to establish shipping arrangements through the strategic waterway, amid heightened concerns about possible disruptions to global oil supplies.

Saudi Arabia continued to operate a key 1,200-kilometer pipeline, damaged by drone strikes on Friday, but acknowledged that the pipeline would be offline for only five to seven days if repairs at its Red Sea port of Yanbu continued at their current pace. This partial shutdown of oil exports could jeopardize up to 4% of global oil supply, on top of the millions of barrels already affected by reduced traffic through the Strait of Hormuz.

The pipeline disruption sent oil prices soaring above $100 per barrel for the first time since July, while US diesel prices reached a record high of $6.20 per gallon on Sunday. In response to the escalating situation, Saudi Crown Prince Mohammed bin Salman reportedly contacted US President Donald Trump on Thursday to request military aid against Houthi rebels in Yemen.

However, the US has so far provided only intelligence support. President Trump reiterated on Saturday his expectation that the Iran conflict would be resolved by the end of the year, adding that oil prices would subsequently drop significantly.