Oil Prices Rally as Gulf Pipeline Shut and Houthi Attacks Intensify

Crude prices climbed sharply on Tuesday after Saudi Arabia announced the cancellation of several September shipments, following drone‑induced damage to its key East‑West export pipeline. U.S. West Texas Intermediate rose 4.4% to close at $105.83 a barrel – the highest level since May 19 – while Brent crude futures gained 2.9% to settle at $108.75. The surge, which has pushed prices more than 20% higher this month, reflects the escalating conflict in the Persian Gulf.

Saudi officials described the pipeline shutdown as a precautionary measure, but have yet to release a damage assessment or an estimate of the outage’s duration. The 7‑million‑barrel‑per‑day artery was hit by a drone attack launched from Iraq last week, prompting the temporary halt. Energy Secretary Chris Wright told CNBC that the line should resume operations within days, calling the interruption “brief and temporary.” Saudi Arabia has been rerouting crude through the Red Sea route as the U.S. and Iran jockey for control of the Strait of Hormuz.

Goldman Sachs’ senior commodity strategist Yulia Zhestkova Grigsby warned that the attacks on oil infrastructure raise the likelihood of a price upside scenario, with Brent potentially exceeding $120.

In Libya, the national oil company suspended activity at two oilfields and a pumping station amid protests, according to Reuters.

Meanwhile, Iran‑backed Houthi militants intensified strikes on Saudi territory, deploying drones and ballistic missiles against the cities of Khamis Mushait, Abha and Taif. The security situation in the Hormuz region remains volatile, with at least two tankers reported under attack since Saturday.

U.S. Central Command disputed an Iranian Revolutionary Guard claim that the Panamanian‑flagged tanker El Gaia struck a naval mine in the strait. Centcom stated that the vessel was actually hit by an Iranian missile last month, rendering it inoperable, and dismissed the mine allegation as a false narrative aimed at intimidating commercial shipping.

These developments underscore the heightened risk to global oil supply chains amid the ongoing Middle East flare‑ups.