Oil prices surged more than 3% on Monday after fresh Houthi attacks on Saudi Arabia and Iranian strikes on Gulf shipping deepened fears over global crude supply following the shutdown of a major Saudi pipeline.
Brent crude climbed $3.21 or 3.1%, to $107.82 a barrel by 0340 GMT while US WTI crude rose $3.17 or 3.2% to $103.22. Analysts at ING said the rally followed intensified attacks on Saudi energy infrastructure particularly the vital east-west pipeline though the extent of the damage and duration of the outage remain unclear.
Saudi officials confirmed the East-West pipeline was temporarily shut after a drone strike. The pipeline allows Saudi Arabia to bypass the Strait of Hormuz and its closure threatens nearly 4% of global oil supply. Industry sources said the export hub at Yanbu has only five to seven days of reserve stock left.
Saudi state media released footage showing damage to homes and a mosque in Jazan province, which it blamed on a Houthi attack. The Houthis also claimed to have hit a Saudi military base in a nearby region.
Separately, Britain's maritime security agency UKMTO reported a vessel struck by a projectile in the Strait of Hormuz sparking a fire and forcing evacuation. Iran said one person died and four were injured after an Iranian commercial ship was hit off its coast.
Adding to regional tensions, Houthi forces seized the strategic island of Perim on Friday, tightening their grip on the Bab el-Mandeb strait, a route carrying 4-5% of global oil supply. Prices had already jumped 8% last week with crossing $100 for the first time since July.
Oman's foreign minister said a planned Monday meeting between Gulf states and Iran on Hormuz security had been postponed. No peace talks have taken place since a June ceasefire collapsed.
