Saudi Arabia shut down its East-West pipeline, which moves 4 million to 5 million barrels of crude a day, after a drone attack traced to Iraq. The pipeline had been the kingdom's main workaround for a shipping logjam in the Strait of Hormuz, and its closure lands alongside a Houthi seizure of a Red Sea island, pushing US diesel prices past $6 a gallon for the first time.
Pipeline shut after drone strike near Medina
Saudi Arabia has shut down its East-West pipeline after a drone attack that Baghdad and Riyadh both said originated in Iraq, where Iranian-backed militias operate. The 1,200-km line crosses the Arabian Peninsula and had let Saudi Arabia route crude oil around the Strait of Hormuz, where tanker traffic has slowed during the six-month war between the United States and Iran. The Saudi Energy Ministry said it closed the line as a precaution, and the pipeline had been moving 4 million to 5 million barrels a day, or 4% to 5% of global supply.
Satellite images showed black smoke rising from an area of the pipeline south of Medina, and the Saudi Foreign Ministry said the strike caused some injuries and damage still being assessed. Iraq dismissed a military commander who had led operations in Maysan province, an area bordering Iran where Shi'ite militias operate. Saudi Arabia has held off retaliating at Baghdad's request, though it says it reserves the right to take all measures necessary to protect its interests.
Diesel tops $6 a gallon as Houthis seize Red Sea island
Oil prices climbed over the past week, and the US retail price of diesel surged past $6 a gallon for the first time as the U.S. and Iran fired on tankers in the Gulf.
Houthi forces in Yemen also tightened their hold on the Red Sea, and four Yemeni government sources told Reuters the group [seized the strategic island of Perim](https://www.investing.com/news/commodities-news/saudis-shut-down-oil-pipeline-as-houthis-tighten-grip-on-red-sea-shipping-4898593) at the mouth of the Bab el-Mandeb strait. The International Energy Agency said Saudi crude supply [fell to its lowest level in more than three decades](https://www.investing.com/news/commodities-news/saudis-shut-down-oil-pipeline-as-houthis-tighten-grip-on-red-sea-shipping-4898593), partly from Houthi-linked attacks on ships in the strait.
Crown Prince Mohammed bin Salman phoned President Trump last week to ask for US military help against the Houthis; two sources said Washington agreed to share intelligence but would not intervene directly for now. Trump, visiting Ireland, said Iran was probably behind the pipeline attack and predicted the war would probably end shortly after November's US midterm elections, when oil prices would fall sharply.
Source: Investing.com
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