Oil prices up over 3% following new strikes on Saudi Arabia, Strait of Hormuz

Oil prices surged over three percent on September 14 following new attacks on Saudi Arabia and Iran's actions in the Gulf, heightening concerns over oil supply following the closure of a vital Saudi pipeline. Brent crude futures increased $3.21, or 3.1 percent, to $107.82 per barrel, while West Texas Intermediate futures rose $3.17, or 3.2 percent, to $103.22 per barrel.

The ING commodity strategists noted the escalation of attacks on Saudi energy infrastructure, including the East-West pipeline, but were uncertain about the extent of damage and the duration of the pipeline's outage. The shutdown of the East-West pipeline, which aids Saudi Arabia in bypassing the Strait of Hormuz and redirecting exports, imperils up to four percent of global oil supply.

With the pipeline offline, Yanbu, a western Saudi city, holds insufficient inventory for four to seven days of exports. Saudi state media published video footage on September 13 showing damage from a Houthi assault on Jazan province. Additionally, a ship in the Strait of Hormuz was hit, causing a fire and requiring crew evacuation.

Iran reported one fatality and four injuries among its crew after a vessel off its coast was targeted. Yemen's Iran-aligned Houthis gained control of Perim Island on September 11, tightening their grip on the Bab el-Mandeb Strait, a crucial oil transit lane contributing to four to five percent of global supply. The surge in oil prices reached eight percent over the week, surpassing $100 for the first time since July.

Omani Foreign Minister Badr Albusaidi announced on social media platform X that a scheduled meeting in Oman between Gulf nations and Iran on September 14 to discuss the Strait of Hormuz had been postponed. Peace talks have not occurred since June's interim agreement fell apart after a few weeks.