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Brent crude climbed past $108 a barrel and WTI neared $103.50 on Monday, both gaining more than 3%, after Saudi Arabia shut a major pipeline and a ship was struck inside the Strait of Hormuz.
- Saudi Arabia halted its East-West pipeline, the kingdom's main overland route for roughly 7 million barrels of crude a day, after a drone strike that multiple outlets now trace to Iraqi territory.
- Houthi fighters in Yemen finished seizing Perim Island on Friday, putting the entire Bab el-Mandeb waterway effectively under their command — a second corridor Saudi Arabia had been leaning on to avoid Hormuz.
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A Monday meeting in Oman meant to ease the Hormuz bottleneck was called off at the last minute, while U.S. diesel keeps breaking price records that hit truckers, grocery shelves and Latino household budgets.
Crude markets opened the week sharply higher after a burst of violence across the Gulf and the Red Sea knocked out two of Saudi Arabia's main export routes within days of each other, reviving worries about a supply squeeze that traders had hoped was easing.
A Critical Pipeline Goes Dark
By midday trading Monday, Brent futures had pushed above $108 a barrel, up roughly 3.3% from Friday's settlement near $104.61, while the U.S. benchmark West Texas Intermediate (WTI) rose to about $103.50, a gain near 3.5%, according to figures tracked by EnergyNow. European natural gas contracts also firmed as traders weighed the region's own exposure.
The immediate trigger was Saudi Arabia's move to shut down its East-West pipeline, the kingdom's primary overland link between crude fields in the Eastern Province and the export terminal at Yanbu on the Red Sea, as reported by The National. Officials at the kingdom's Energy Ministry called the shutdown a precaution, taken after drones struck near Madinah and southern Riyadh before sunrise Thursday and left a number of people hurt, per the same report. Several outlets have since identified the origin of the drones as Iraqi territory near the Iranian border, a detail also referenced in a statement from the Gulf Cooperation Council. Jasem Mohamed Albudaiwi, who heads the six-nation bloc as its top official, described the strike as a serious escalation and a breach of international norms, blaming Iran-aligned armed groups, according to Iran International.
The line matters because it can carry up to seven million barrels a day, making it Saudi Arabia's main workaround for keeping oil flowing without sending it through an increasingly dangerous Strait of Hormuz, per The National. Industry estimates cited by EnergyNow put roughly a twentieth of worldwide crude output at risk from the closure, and Saudi stockpiles at Yanbu may cover exports for under a week before running low; some assessments suggest repairs could stretch into several weeks.
A Second Flashpoint Inside Hormuz
Saudi Arabia's fallback route didn't fare much better. Early Sunday, an Iranian-flagged cargo vessel was hit near Qeshm Island inside the Strait of Hormuz, killing one crew member and wounding four others, according to Iranian state media cited by CNN. Local officials, quoted through Iran's state news agency, blamed an unnamed hostile actor for the strike, and the U.S. military had not issued a public response by the time of publication. A second vessel, the Panama-flagged tanker MT El Gaia carrying 14 Indian crew members, was reportedly struck around the same time, India's foreign ministry told CNN.
The strait sits at the center of a broader conflict between the United States, Israel and Iran that has run since late February, and daily tanker traffic through the waterway remains roughly 90% below pre-war levels despite U.S. Navy escort missions, per CNN. JD Vance made the case for keeping American forces there last week, insisting: "we are the only country in the world that can ensure" control over the passage, remarks CNN reported — a claim that sits uneasily against the sharply reduced shipping volumes still moving through it.
Houthis Tighten Their Hold on the Red Sea
Farther south, on Friday, Yemen's Iran-backed Houthi movement wrapped up a fast-moving offensive by capturing Perim Island, also called Mayun, sitting inside the narrow Bab el-Mandeb waterway, according to government and Houthi sources cited by Euronews. The rocky outcrop marks the passage's tightest point and splits its only two navigable shipping lanes, so its capture effectively gives the Houthis command of a corridor used by a meaningful slice of global east-west trade. A Houthi military spokesman said shipping would remain open to every company except Saudi-flagged vessels, which the group said were now barred from the route.
Diplomacy Stumbles in Oman
A meeting planned for Monday in Oman, where Gulf and Iranian representatives were due to discuss easing the bottleneck at Hormuz, was scrapped hours before it was set to begin. Badr Albusaidi, who leads Oman's foreign ministry, posted on social media that "the regional meeting set for tomorrow in Salalah has been postponed," without offering a new date.
Asked about the gathering days earlier, President Trump waved off its importance and floated the idea of a longer American presence in the region: "Unless we decide to stay and keep the oil, like Venezuela," he said.
Market watchers are tracking both fronts — the stalled diplomacy and the disabled pipeline — to gauge how much further prices could run. Goldman Sachs has said Brent could push back up near the $120 mark before year's end if the Hormuz disruption drags on, even though the bank's base-case forecast sits well below that level, according to a note covered by InvestingLive.
The Toll on American Wallets
For Latino households in the United States, the fallout from the Gulf shows up first at the pump and the grocery counter. The national average for regular gasoline stood at $4.29 a gallon on Friday, while diesel — the fuel that keeps freight trucks and delivery fleets running — reached an AAA-recorded average of $6.05 that same day, its first time above $6, according to NPR. By Saturday, AAA's tracker put the national diesel average even higher, at $6.16 a gallon, a fresh all-time high, per WRTV. Diesel is now roughly 60% pricier than it was before fighting between Washington and Tehran erupted at the end of February, NPR reported.
Because diesel underpins trucking and food distribution, the increase is expected to filter into grocery prices and shipping fees in the coming weeks, a burden that tends to fall hardest on middle- and lower-income households. That includes neighborhoods in cities such as Houston, where a large share of residents, including many Latino families, rely directly or indirectly on the energy industry for work.
With talks in Oman on hold and Saudi Arabia's main pipeline still offline, analysts expect oil prices to keep reacting to every new flashpoint in the Gulf and the Red Sea, with no clear diplomatic breakthrough yet in view.
