A new attack on shipping in the Strait of Hormuz and a drone strike that forced Saudi Arabia to shut its East-West pipeline are squeezing two of the region's main oil corridors at once. Iran has denied responsibility for the pipeline strike and denied being at war with Saudi Arabia, while crude prices have climbed sharply.
The British navy-affiliated agency UKMTO said it received a report of a projectile hitting a vessel as it moved through the Strait of Hormuz on Sunday, and that the crew was evacuated after a fire broke out. The report came a day after Saudi Arabia said it had temporarily closed its 1,200-km East-West pipeline as a precaution, following a drone attack that Baghdad and Riyadh said originated in Iraq, where Iranian-backed militias operate.
Oil prices jump as two corridors come under strain
The pipeline normally moves 4 million to 5 million barrels per day, or 4% to 5% of global supply, and has served as the main route for Middle East crude oil exports while the Strait of Hormuz has been largely shut by the wider war. Against that backdrop, Brent crude surged back above $100 a barrel over the past week. No group has claimed responsibility for the pipeline strike, and satellite images showed smoke rising from an area south of Medina.
Tehran denies involvement and denies war with Riyadh
U.S. President Donald Trump said Iran was probably to blame for the pipeline attack. Iranian President Masoud Pezeshkian pushed back, declaring that his country is "not at war with Saudi Arabia" and calling for regional states to help build a broader security framework. Saudi Arabia held off on an immediate retaliatory strike, a restraint that reportedly came at Baghdad's request.
Hormuz traffic remains a fraction of its former self
The strait normally carries roughly 20 million barrels of oil a day, about 20% of global supply, through a corridor barely 21 miles wide at its narrowest point. But on the most disrupted days, vessel transits have fallen to as few as 5 to 10 ships, against a pre-conflict norm of more than 130 per day, while oil flow has at times dropped to roughly 2 million barrels per day, a 90% decline. Iran and Gulf Arab states are due to meet in Oman on Monday to discuss the strait's future, though a senior Iranian official played down the odds of a breakthrough. The region's geopolitical risk now bears on two of the world's busiest oil routes at once.
Sources: Commodities & Futures News, Crypto Briefing
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