Persian Gulf states call off meeting with Iran as Houthis launch new attack on Saudi Arabia
Arab states in the Persian Gulf called off a meeting with Iran planned for Monday, while Yemen's Houthis launched a new attack on Saudi Arabia after fighting that has extended the Middle East war to another theatre and further jeopardized global oil supplies.
On Monday, Gulf states suspended their scheduled meeting with Iran to reopen the Strait of Hormuz, the same day that the Houthis launched a barrage of missiles and drones at Saudi Arabia's King Khalid airbase in Khamis Mushait. This attack was seen as retaliation for the over 300 Saudi airstrikes on Yemen in just five days.
Moreover, a drone attack on Riyadh, blamed on Iran-backed fighters in Iraq, had crippled Saudi Arabia's only alternative route around the blockaded Hormuz, the 7-million-barrel-a-day East-West pipeline that supplies the Red Sea port of Yanbu. With only five to seven days of oil left in Yanbu, the closure of this pipeline could potentially disrupt up to 4% of the global oil supply, as traders informed Reuters.
Brent crude surged over 3% upon the markets' reopening on Monday, reaching $108 before dipping to $107.22, while West Texas Intermediate (WTI) was trading at $102.66. U.S. diesel hit a new high of over $6.23 per gallon, contributing to a run-up that has already cost U.S. drivers more than $100 billion in additional fuel expenses since the conflict began. The International Monetary Fund (ING) has maintained its fourth-quarter Brent forecast at $80, citing that the volumes are still moving through Hormuz.
The Houthis recently captured Perim Island, which divides the Bab al-Mandeb strait into two, and then positioned fighters on the Greater and Lesser Hanish, approximately 86 nautical miles north. This region plays a significant role in global trade, as it accounts for 12% of maritime oil and 8% of liquefied natural gas (LNG). David Schenker, a former State Department official, described the simultaneous Iranian grip on Hormuz and Bab al-Mandeb as "the worst-case scenario... two of the leading energy choke points in the world."
Saudi Crown Prince Mohammed bin Salman met with U.S. Central Command chief Admiral Brad Cooper in Jeddah on Monday, seeking American strikes on the Houthis. However, Washington responded with intelligence-sharing instead. In a shocking statement on Sunday, U.S. President Trump hinted that the U.S. could remain in Iran and "keep the oil," comparing it to the situation in Venezuela, and promised that oil sales there would "pay for the war many times."
He also suggested that gas prices would "drop like a rock" once the war concludes, expecting it to happen shortly after the midterms.
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