Oil prices experienced a significant surge following coordinated drone attacks on Saudi Arabia's critical East-West oil pipeline, launched from Iraqi territory. The strikes, which occurred Thursday, led to the pipeline's precautionary shutdown, impacting the kingdom's daily export capacity of seven million barrels.
Saudi Arabia's Ministry of Energy confirmed the attacks on pump stations in the Riyadh and Medina regions, reporting injuries. The East-West pipeline is crucial for the kingdom, providing a vital route for crude exports that bypasses potential restrictions through the Strait of Hormuz. This is not the first time the pipeline has been targeted; it suffered an attack in April, though operations were quickly restored.
The attacks coincided with the Houthi rebels' claim of control over the Bab al-Mandab Strait and Yemen's Red Sea coastline. This strategic waterway is a critical chokepoint for global shipping, linking the Red Sea to the Gulf of Aden and onward to the Suez Canal. The Houthis' seizure of Mayyun Island and other islands within the strait heightens their ability to impact shipping traffic.
Brent crude futures rose more than 8 percent over the week, settling at $104.56 a barrel, while average U.S. diesel prices surpassed $6 per gallon for the first time. Prices spiked on Thursday as news of the pipeline attacks circulated. The situation is further complicated by Iran's alleged support for the Houthi advances, with an advisor to Iran's supreme leader congratulating the group on its