Oil Prices Surge as Middle East Attacks Continue and Diplomacy Stumbles

Oil markets reacted swiftly to a fresh wave of regional tensions, with benchmarks spiking in early Asian trade as traders priced in the risk of wider supply disruptions. Both WTI and Brent eased back slightly from their initial gains but remained notably higher on the day, reflecting heightened market nervousness. The immediate trigger for the rally included claims by the Houthi movement that it had carried out a large-scale missile and drone attack on Saudi targets, including a military base near Sharurah, while Saudi outlets separately reported a projectile landing in Jazan. Those incidents followed last week’s assault on Saudi Arabia’s East-West Pipeline, which forced the closure of one of the country’s main crude export corridors after several pumping stations were reportedly struck by drones launched from Iraq. Maritime risks added to the supply concerns. A UKMTO alert indicated a vessel in the Strait of Hormuz had been hit by an unknown projectile, and the AP later reported an Iranian cargo ship was struck off Qeshm Island, though it was not clear whether the two reports described the same event. Meanwhile, Houthi advances in Yemen — including their recent seizure of the island of Perim — have expanded the group’s reach over the Bab el-Mandeb Strait, raising the prospect of further pressure on Red Sea shipping lanes. Diplomacy that might have alleviated some uncertainty stalled when Oman’s foreign minister, Badr Albusaidi, said a planned meeting between Gulf states and Iran was postponed due to lack of consensus. The session was to consider a temporary arrangement for managing shipping through the Strait of Hormuz and would have brought GCC foreign ministers together with their Iranian counterparts for the first time since the war began. Traders warn that unless Saudi Arabia can restore flow through the East-West Pipeline quickly and talks are reconvened, oil prices may remain under upward pressure amid uncertainty over how much crude could be taken off the market in the near term.