Saudi Arabia has shut down its key East-West crude oil pipeline as a precaution after multiple attacks, according to the kingdom’s Energy Ministry. The pipeline was struck in the Riyadh and Madinah regions on Thursday morning, with injuries reported among those targeted. Emergency teams were sent to assess the safety of the pipeline following the attacks, though officials did not identify who was behind them or how much damage occurred. Iran-allied Houthi militants in Yemen have intensified their strikes on Saudi Arabia this week, including attacks on energy facilities that left more than seventy people injured. The Houthis declared a maritime embargo against Saudi Arabia in July and have been trying to disrupt oil exports through the Bab el-Mandeb Strait. Saudi Aramco CEO Amin Nasser said last month that the pipeline has become more important in reducing the impact of supply disruptions than emergency reserves. Oil prices rose above $100 per barrel this week as fighting escalated across the region, with Friday’s closing price up more than eight percent from the previous week. The pipeline strike may have contributed to the price increase as rumors about the attack spread through markets on Thursday.
Meanwhile, tensions between Saudi Arabia and Iran continue to intensify over control of the Strait of Hormuz, a vital global energy chokepoint, according to Fortune. Iran has been blocking shipping through the strait, while Saudi naval forces have imposed a blockade that limits Iran’s oil exports from its ports. At the same time, Iranian drone and missile attacks are preventing other exporters from returning to prewar levels of production. A recent meeting between Iran and Gulf Cooperation Council members has renewed hope for a temporary deal that could ease traffic in the strait. However, such an agreement would not fully reopen the Strait of Hormuz, as the GCC states are wary of any deal that might give Iran control over the passage. The GCC nations must first fulfill terms from an earlier ceasefire agreement reached in June before any progress can be made on the shipping plan. Saudi Arabia’s military has also been helping non-Iranian oil bypass the strait, bringing exports to about two-thirds of prewar levels. This shift in oil flow has weakened Iran's ability to use the strait as a political tool, according to analysts. The ongoing naval blockade is also severely hurting Iran’s economy, with the country facing growing pressure from international sanctions.
In addition to the conflict with Iran, Saudi Arabia has been dealing with threats from Houthi rebels in Yemen, who have attacked oil infrastructure and tankers. After Iran closed the Strait of Hormuz, Saudi Arabia redirected its oil exports through the Bab al-Mandab Strait, using its East-West Pipeline. However, recent Houthis attacks on the pipeline and tankers have disrupted this route as well. Saudi Arabia has asked its allies for support in countering the Houthi threat but received no approval for military intervention. U.S. officials said the Trump administration will provide intelligence and targeting data to help Saudi Arabia deal with the Houthis. But U.S. forces are not expected to engage in fighting on a new front, focusing instead on Iran and the Strait of Hormuz.
Saudi Arabia also has a defense pact with Pakistan, which has deployed troops near its border with Yemen. However, Pakistan is reluctant to get involved in the conflict due to its own dependence on energy shipments through the Strait of Hormuz and the Red Sea. Pakistan’s foreign ministry has stated that no military response to Houthi attacks is being discussed. The country's army chief emphasized diplomatic efforts in talks with Iran’s foreign minister to reduce tensions across all fronts. A Pakistani government official said the nation is trying to stay neutral in the Saudi-Houthi conflict due to its high stakes.
Oil prices have risen sharply this week amid growing concerns over supply disruptions and regional instability, according to a report from kiplinger.com. Market participants reacted to the latest inflation data and increased odds of a rate hike, sending stocks higher despite rising oil costs. The main indexes reversed a four-day losing streak, with Dell Technologies surging after an analyst initiated coverage with a strong buy rating. Oracle reported a 30% year-over-year increase in both earnings per share and revenue, with cloud revenue jumping 62%.