Brent crude briefly moved above $108 a barrel on Monday as markets assessed further attacks affecting Saudi Arabia, disruption around regional shipping routes and the postponement of planned talks concerning the Strait of Hormuz.
Brent futures rose as much as 3.5% to $108.41 a barrel before trading at $107.37 by 22:42 ET (02:42 GMT).
US West Texas Intermediate futures increased 3.9% to $102.84 a barrel.
The latest price moves followed developments affecting both the Strait of Hormuz and Bab el-Mandeb, two shipping routes used for energy exports from the Middle East.
Saudi East-West Pipeline Closed Following Attacks
Yemen’s Iran-aligned Houthi group carried out additional attacks against Saudi targets over the weekend and increased its activity around Bab el-Mandeb.
The latest developments followed attacks during the previous week on several Saudi targets, including an Aramco refinery and fuel terminal, fuel plants and airports. Vessels operating around Bab el-Mandeb were also targeted.
Bab el-Mandeb has become more relevant to Saudi oil exports as some shipments previously transported through the Strait of Hormuz have been redirected towards the Red Sea.
Saudi Arabia said its East-West pipeline had also been shut following further Houthi attacks. The pipeline allows crude to be transported across the country towards the Red Sea, providing an alternative to routes through the Persian Gulf.
“Riyadh has now lost the option to use western exports if the Strait of Hormuz deteriorates again. This is likely to put further upward pressure on oil prices this week,” ANZ analysts said in a note.
Iran-Gulf Meeting Postponed
Oman’s foreign minister, Sayyid Badr Albusaidi, said a regional meeting between Iran and Gulf states that had been scheduled for Monday was postponed.
Expectations surrounding the meeting had contributed to a moderation in crude prices during the previous week as investors considered whether diplomatic discussions could lead to reduced disruption around the Strait of Hormuz.
The postponement left the timing of any rescheduled meeting uncertain.
Oil shipments through Hormuz have already fallen to a fraction of prewar levels following renewed hostilities between the United States and Iran in August.
The disruption of Saudi Arabia’s alternative western export infrastructure alongside reduced Hormuz traffic has left regional shipping conditions as a factor for oil markets.
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