Gulf states called off Monday's meeting with Iran on reopening the Strait of Hormuz, hours after Yemen's Houthis fired missiles and drones at a Saudi military airbase. Oil prices jumped as both of Saudi Arabia's crude export routes now stand blocked or damaged, while equities slipped on the widening Middle East conflict.
Gulf states called off a meeting with Iran planned for Monday on reopening the Strait of Hormuz, hours after Yemen's Houthi forces fired dozens of missiles and drones at Saudi Arabia's King Khalid Air Base near Khamis Mushait, hitting aircraft hangars, radar systems, runways and ammunition depots. Oman's foreign minister said the talks were postponed in the interest of consensus, while Iran said Saudi Arabia had requested the delay. The Houthis described the strike as retaliation for hundreds of Saudi airstrikes on Yemen in recent days.
Both Saudi export routes now compromised
The Strait of Hormuz has been largely closed since the U.S. and Israel attacked Iran at the end of February. A separate drone attack blamed on Iran-backed fighters in Iraq knocked out Saudi Arabia's East-West pipeline, the kingdom's only crude route bypassing the strait, late last week. Traders say the pipeline outage alone could cut off as much as 4% of global oil supply if it stays shut for more than a few days.
Oil jumps, equities retreat
In early Asian trading, Brent crude climbed to roughly $107.54 a barrel and West Texas Intermediate to about $102.93, each up nearly 3%. By the U.S. open, WTI had advanced more than 4% to about $104.15. Brent later traded above $109 a barrel, up more than 4% on the session.
The U.S. average retail diesel price hit a new all-time high above $6.23 a gallon. Energy costs at that level feed into inflation across transport, manufacturing and food, Crypto Briefing noted. Meanwhile the Dow Jones Industrial Average dropped 0.4%, the S&P 500 slipped 0.7% and the Nasdaq Composite fell 1.1%, even as the SPDR S&P Oil & Gas Exploration & Production ETF rose nearly 2% on the energy rally.
Iran's ship list raises the stakes
Iran issued a list of 77 ships it said had violated its protocols for operating in the Strait of Hormuz, warning that listed vessels face restrictions on future passages, including fines, detention, or confiscation. U.S. Energy Secretary Chris Wright said the number of ships crossing the strait covertly with U.S. support was increasing, though independent monitors have suggested oil flows could have dropped this month as fighting re-escalated after a quiet August. Traders can price in a known supply disruption, but struggle to price a region where diplomacy is failing and both of the region's main export routes are compromised at once, Crypto Briefing noted.
President Donald Trump said he expects the Iran war to end shortly after November's elections, after which he expects oil to "drop like a rock."
Sources: Reuters, via Investing.com, Investor's Business Daily, Crypto Briefing
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