Saudi pipeline shutdown and postponed Oman talks push oil past $107

Pipeline shutdown and transport chokepoints

Saudi Arabia temporarily halted operations on its 1,200-kilometer East-West pipeline after drone strikes hit facilities in the Riyadh and Medina regions. The pipeline had served as the primary transit conduit for Persian Gulf crude over the previous six months, bypassing the Strait of Hormuz which has been largely closed due to the conflict between Iran, the United States, and Israel that began in February 2026. Prior to the shutdown, the pipeline transported between four and five million barrels per day, representing roughly 4% to 5% of global oil supplies. Both Riyadh and Baghdad reported that the drones originated from Iraqi territory, where Iranian-backed militias operate. Oil buyers and traders noted that storage inventories at Red Sea export terminals hold only five to seven days of fuel. Further south, the Iran-backed Houthi movement announced on Friday that it took control of the Bab al-Mandab strait after capturing the strategic island of Perim.

Military escalations across the Gulf

Regional security conditions deteriorated further over the weekend across multiple theaters. In Saudi Arabia, state media broadcast footage of damage to civilian houses and a mosque in the southern province of Jazan following Houthi drone and missile strikes. Houthi forces also claimed an attack against a Saudi military base in an adjacent province. In response, Saudi aircraft carried out more than 50 airstrikes against Houthi targets within a 24-hour period on Sunday. In the Strait of Hormuz, the United Kingdom Maritime Trade Operations reported that a projectile struck a commercial vessel, igniting a fire that forced the crew to abandon ship. Diplomatic communications accompanied the fighting, as Saudi Crown Prince Mohammed bin Salman spoke by telephone with US President Donald Trump on Thursday to request direct military support against the Houthis. Washington declined immediate direct military intervention, agreeing instead to provide intelligence assistance, while Trump publicly attributed the pipeline strike to Iran.

Postponed diplomatic talks in Oman

Hopes for a negotiated resolution to the maritime transit crisis were put on hold over the weekend. Foreign ministers from Persian Gulf countries had been scheduled to convene on Monday in Salalah, Oman, where representatives from Iran and Oman intended to present a draft proposal to ease the standoff over the Strait of Hormuz. On Sunday evening, Omani Foreign Minister Badr al-Busaidi announced on social media that the regional diplomatic conference was delayed.

In the interest of consensus, the regional meeting planned for tomorrow in Salalah was postponed.

The cancellation ended expectations of an immediate diplomatic breakthrough that had briefly pushed crude prices lower late the previous week.

Benchmark price surge and repair outlook

Crude oil prices rose across global trading sessions on Monday morning as markets factored in the simultaneous supply bottlenecks. Brent crude for November delivery climbed 2.8% to $107.54 per barrel, approaching the $110 mark, while US West Texas Intermediate crude increased 2.3% to trade at $102.34 per barrel. Brent has advanced by nearly 80% since the start of 2026, although prices remain below the wartime peak of more than $126 per barrel recorded in late April. The timeline for restoring pipeline flows remains uncertain, as the Saudi energy ministry provided no official schedule for repairs. One industry source indicated that full restoration could require five to six weeks, while other market participants suggested that a partial reopening might take place earlier.