Middle East Crisis Escalates, Putting Global Oil Supplies at Risk
Fresh attacks on key energy and shipping routes have reignited concerns over global oil supplies, with traders preparing for renewed price pressure
The Middle East crisis has escalated over the weekend, raising fresh concerns about disruptions to global oil supplies and putting pressure on traders already watching energy markets closely. A vessel was struck while travelling through the Strait of Hormuz, while a drone attack shut down Saudi Arabia's key East-West oil pipeline. At the same time, Houthi forces have expanded their control around the Bab el-Mandeb Strait, creating additional risks for oil shipments moving through the Red Sea.
The developments come after global oil benchmarks fell about 2% on Friday, but the weekend attacks have changed expectations for the next trading session. Traders are now preparing for the possibility of oil prices moving higher as concerns grow over whether important supply routes can continue operating normally. The pressure is already visible in refined fuel markets, with US retail diesel prices reaching another record above US$6.20 per gallon ahead of the weekend.
Hormuz disruption adds to supply concerns
The latest incident in the Strait of Hormuz has added another layer of uncertainty for energy markets. The British maritime security agency UKMTO reported that a vessel was struck by a projectile while travelling through the strategic waterway, triggering a fire and forcing its crew to evacuate. Iran also reported that a commercial vessel near its coast had been struck, with one person killed and four crew members injured.
The Strait of Hormuz remains particularly important to global energy trade, meaning further disruption could quickly affect the availability and pricing of crude oil and refined products. The latest incident therefore comes at a sensitive time for oil markets, where traders are already assessing how much supply can move safely through the region.
Saudi pipeline attack removes a key alternative route
The situation has been further complicated by the attack on Saudi Arabia's 1,200-kilometre East-West oil pipeline. The pipeline has traditionally provided Saudi Arabia with an alternative route for transporting crude towards the Red Sea, allowing exports to bypass the Strait of Hormuz.
The pipeline can carry up to 4 million barrels of crude a day, equivalent to roughly 4% of global oil supply. Its disruption therefore creates a significant challenge if the Strait of Hormuz remains difficult to navigate.
Reports differ over how long repairs could take, with one assessment suggesting five to six weeks while another indicates that the pipeline could potentially resume partial operations sooner. Saudi Arabia has not provided a definitive timeline.
Red Sea risks add another layer of uncertainty
The risks are not limited to Hormuz and Saudi Arabia. Houthi forces have claimed attacks on Saudi targets and have also captured Perim Island, which sits within the Bab el-Mandeb Strait at the entrance to the Red Sea.
The development is significant because Bab el-Mandeb is another important shipping route for global energy supplies. With tensions now affecting several critical routes simultaneously, oil importers and traders face greater uncertainty over how much crude can move through the region and how quickly alternative supply routes can compensate.
For the oil market, the key question is whether these disruptions remain temporary or develop into a broader supply shock. With Hormuz, Saudi pipeline infrastructure and the Red Sea all facing heightened risks, the possibility of renewed upward pressure on oil prices is becoming harder for traders to ignore.
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