Gulf diplomacy falters as Hormuz meeting collapses and Saudi pipeline stays shut

Middle East diplomacy hit a fresh setback heading into Monday after a planned meeting between Iran and Gulf Arab powers was postponed, while renewed attacks on the region’s two key oil corridors pushed global energy markets further into turmoil.

Oil prices jumped as trading opened Monday, reflecting mounting worry over supply from Saudi Arabia, the world’s largest exporter, which kept its critical 1,200 kilometer east west pipeline shut through the weekend after drone strikes damaged it on Friday. Hopes for a near term diplomatic breakthrough faded late Sunday when Oman’s foreign minister, Sayyid Badr Albusaidi, announced that a regional meeting scheduled for Monday had been postponed in the interests of consensus. Iranian officials had planned to attend the gathering with Gulf Arab states to present an agreement worked out with Oman on governing shipping through the Strait of Hormuz. Iranian state media cited a foreign ministry official as saying the meeting was delayed at the request of some regional countries, in a decision reached jointly by Tehran and Muscat, and that Iran would work with Oman to set a new date.

The postponement followed closely on Saudi Arabia’s decision to keep offline, for now, the pipeline that has served as the region’s main route for moving Middle East crude around the Strait of Hormuz. The strait itself remained dangerous for shipping over the weekend, with Britain’s maritime security agency UKMTO reporting that a vessel was struck by a projectile while transiting the waterway, sparking a fire and forcing an evacuation of the crew. Iran said separately that one person died and four crew members were wounded when a projectile struck an Iranian commercial vessel off its own coast.

Energy prices have felt the strain. Crude passed 100 dollars a barrel last week for the first time since July, and the retail price of diesel in the United States climbed to another record above 6.20 dollars a gallon on Sunday. Traders and Saudi oil buyers said Riyadh holds enough stock at its Red Sea port of Yanbu to sustain exports for only five to seven days if the damaged pipeline remains out of service. Beyond that window, as much as 4 percent of global oil supply could be at risk, on top of the barrels already lost to disrupted traffic through Hormuz. Saudi authorities have not detailed the extent of the pipeline damage or given a firm timeline for repairs, and estimates gathered from industry sources range from a matter of days to as long as five or six weeks. Satellite imagery has shown heavy smoke rising from points along the route.

The latest violence marks an escalation in the conflict the United States and Israel launched against Iran six months ago, following a relatively quiet August during which Middle East oil flows had begun recovering. Iran’s foreign minister, Abbas Araqchi, said in an interview that Tehran will not reopen the strait, even with an agreement involving Oman, until Washington meets Iran’s demands. The United States has yet to achieve the goals President Donald Trump set out when the military campaign began in February: ending Iran’s nuclear program, stopping its ability to strike neighboring states, and creating conditions for Iranians to remove their leadership. Speaking during a weekend visit to Ireland, where he attended the Irish Open golf tournament, Trump repeated his expectation that the war would end sometime this year, possibly shortly after the November midterm elections, after which he said gasoline prices would fall sharply.

Fighting tied to Yemen’s Houthi movement also continued to intensify. Saudi state media released footage showing damage to homes and a mosque in the southern Jazan province from what officials described as the latest cross border strike by the Iran aligned group, and the Houthis separately claimed to have hit a Saudi military base in a neighboring province. The attacks came after Houthi fighters seized Perim Island in the Bab el Mandeb strait, which controls access to the Red Sea, part of what officials describe as the most serious escalation of fighting inside Yemen in years. The advance leaves Washington with a difficult balancing act between supporting Saudi allies and protecting shipping lanes while avoiding deeper involvement in another front of conflict, and it forces Gulf states to weigh mounting economic damage against the option of engaging directly with Iran. Three sources said Saudi Crown Prince Mohammed bin Salman called Trump last Thursday to request military assistance against the Houthis but was offered only intelligence support for now. Trump confirmed the call over the weekend and said the Houthis had also reached out to Washington, asking that the United States stay out of the conflict in Yemen.

Separately, Iranian President Masoud Pezeshkian said Sunday that Iran and the United Arab Emirates had agreed to strengthen bilateral ties, following a meeting with Abu Dhabi Crown Prince Khaled bin Mohamed bin Zayed Al Nahyan on the sidelines of the BRICS summit in New Delhi. Pezeshkian said both sides agreed to move past prior disputes and build a shared understanding for future cooperation, with the two leaders also discussing broader efforts to ease regional tensions.

The compounding disruptions have already pushed Saudi oil output to its lowest level in more than three decades, with production falling from 10.9 million barrels a day in February, before the war began, to just 6.2 million barrels a day in August, according to figures Saudi Arabia reported to OPEC. The International Energy Agency said global oil supply is on track to fall by 5.7 million barrels a day this year, a drop of roughly 6 percent, citing both the pipeline attack and the reduced flows through Hormuz, which have slowed to between 6 million and 9 million barrels a day from a pre war regional total of around 22 million. With diplomatic efforts stalled and the timeline for pipeline repairs still unclear, the standoff underscores how quickly localized attacks in Yemen and the Gulf can cascade into a broader threat to global energy supply, a dynamic that has repeatedly reshaped oil markets during past disruptions to the same shipping corridors.