Attack on Strait of Hormuz Vessel and Saudi Pipeline Closure Spark Oil Supply Fears

A ship was hit by a projectile in the Strait of Hormuz on Sunday, according to the British navy affiliated agency UKMTO. This incident follows the temporary closure of Saudi Arabia's East West pipeline, a vital route that transports 4 million to 5 million barrels of oil per day, or roughly 4 to 5 percent of the global supply. Saudi Arabia closed the 1,200 kilometer pipeline as a precaution after a drone attack that Baghdad and Riyadh stated originated in Iraq, where Iranian backed militias operate. Satellite images showed black smoke rising south of Medina, and the Saudi Foreign Ministry reported injuries and damage. US President Donald Trump stated that Iran was probably to blame for the pipeline attack.

Regional tensions have escalated as the Iran aligned Houthi rebels in Yemen seized the strategic island of Perim in the Bab el Mandeb strait on Friday. In the Jazan region, a Houthi projectile injured two people and damaged several buildings, including a mosque. Crown Prince Mohammed bin Salman contacted President Trump on Thursday to request US military assistance in fighting the Houthis. Trump confirmed the call and stated that Washington would provide intelligence but would not intervene directly for now. Trump also noted that the Houthis contacted his administration to request that the US not become directly involved in the conflict.

Economic impacts are already evident as Brent crude surged back above 100 dollars a barrel and US retail diesel prices exceeded 6 dollars a gallon. Diplomatic efforts remain strained. Iran is scheduled to meet with Gulf Arab states in Oman on Monday to discuss the future of the Strait of Hormuz. However, a senior Iranian official played down the chances of a breakthrough. Ebrahim Azizi, head of the Iranian parliament's national security committee, stated on X that negotiation is useless unless the US accepts all of Iran's conditions. Some reports indicate that Iran is seeking recognition of its control over the Strait of Hormuz to collect transit fees, a demand the US rejects.