Oil prices surge as Gulf talks collapse and Houthi strikes widen

Oil markets jumped sharply on Monday after Saudi Arabia shut a critical export pipeline and a planned diplomatic meeting between Iran and Gulf states over safe passage through the Strait of Hormuz fell apart, as attacks tied to Yemen’s Houthi movement continued to spread across the region.

Brent crude climbed as much as 3.5 percent to touch 108.41 dollars a barrel before easing slightly, while U.S. West Texas Intermediate futures rose close to 4 percent to around 103 dollars. Both benchmarks have now pushed past the 100 dollar mark for the first time since July, driven by a string of attacks over the weekend on Saudi territory, on shipping near the Strait of Hormuz and on the Bab el Mandeb strait that controls access to the Red Sea.

Saudi Arabia confirmed it shut its East West pipeline, a roughly 1,200 kilometer route that carries crude across the Arabian Peninsula and gives the kingdom a way to export oil without passing through Hormuz. The energy ministry described the closure as a precautionary measure and gave no timeline for restoring the line, which had come under a drone strike traced back to Iraq the previous Friday. Traders and Saudi oil buyers said the kingdom holds only enough crude at its Red Sea port of Yanbu to sustain exports for five to seven days without the pipeline, while some reports suggest repairs could stretch five to six weeks. Analysts at ANZ noted that Riyadh has effectively lost its western export option if conditions in the Strait of Hormuz deteriorate further, a development they expect to keep pushing oil prices higher through the week.

Vessel traffic through Hormuz has already slowed to a trickle in recent days. On Sunday, Britain’s maritime security agency said a vessel transiting the strait was struck by a projectile, sparking a fire that forced the crew to evacuate. Iranian state media separately reported that a commercial vessel off Iran’s coast near the islands of Qeshm and Hengam was hit in what it called an enemy strike, killing one crew member and wounding four others. Saudi state media also released footage showing damage to homes and a mosque in the kingdom’s southern Jazan province, which it attributed to a Houthi attack, while the Houthis said they separately struck a Saudi military base in a neighboring province. The Iran aligned group has also stepped up activity around Bab el Mandeb after reportedly seizing Perim Island, which sits at the strait’s narrowest point.

Against that backdrop, a planned meeting in the Omani city of Salalah between Iran and Gulf Cooperation Council states, intended to discuss a temporary safe passage arrangement through Hormuz, was postponed just a day before it was due to take place. Oman’s foreign minister announced the delay on social media late Sunday without giving a new date. Iran’s foreign ministry said the postponement came at Saudi Arabia’s request and accused Riyadh of using the situation in Yemen as a pretext to avoid addressing what it called the root causes of the crisis, while people familiar with the matter said Saudi frustration over the continuing Houthi attacks played a role in the decision. Iraq had planned to send a delegation, and Saudi Arabia and Qatar were expected to be represented by their foreign ministers, though Bahrain had already said it would not meet with Iranian officials. A senior Iranian official had cautioned even before the postponement that any talks were unlikely to produce a signed agreement to reopen the strait.

The compounding disruptions have already fed through to fuel markets. Saudi seaborne oil exports have fallen to roughly 3.2 million barrels a day, their lowest level in thirteen years, and the pipeline shutdown alone threatens to remove close to 4 percent of global supply if it persists. In the United States, retail diesel prices climbed to a fresh record above 6.20 dollars a gallon on Sunday, adding pressure on industries and consumers already contending with a broader run up in energy costs. Market analysts have pointed to the March high near 119.48 dollars a barrel as a possible next target for Brent crude if this week’s diplomacy fails to produce a workable outcome or the pipeline does not return to service quickly.

The United States bombed Houthi positions for two months in 2025 before President Trump halted the campaign after the group said it would stop targeting Red Sea shipping, a truce that now appears to be unraveling as attacks resume on multiple fronts. With the Gulf talks stalled and no clear timeline for repairs to Saudi infrastructure, the standoff illustrates how quickly a localized conflict can ripple through global energy supply chains, echoing past disruptions in the same waterways that have historically triggered lasting shifts in shipping routes and oil pricing. The situation remains fluid, and markets are likely to stay volatile until either the diplomatic track resumes or the physical damage to regional oil infrastructure is repaired.