Following the Iranian blockade of the Strait of Hormuz and the increasing threats at the Bab al-Mandab Strait from the Houthi militias in Yemen, the Kingdom was forced to shut down a major pipeline after drone attacks. This additional reduction in Saudi exports may lead to a new rise in oil prices.
The Saudi Ministry of Foreign Affairs announced overnight on the “X” platform that the drone attack, which was launched from Iraq, caused damage and injured several people.
The Iraqi authorities found platforms for launching drones near the border with Iran, according to what two Iraqi security sources reported on Saturday (September 12), following a drone attack targeting a pipeline in Saudi Arabia, which Riyadh and Baghdad said had been launched from Iraqi territory. A security source said, "Security forces found drone launch pads near the Iraqi-Iranian border in the remote Tayeb area in the southern Maysan governorate." A second security source confirmed these details.
Saudi Arabia has closed, as a precaution, the “East-West” pipeline, which is considered a lifeline in light of the stalled traffic through the Strait of Hormuz. The Kingdom transports large quantities of oil from the Arabian Gulf to the Red Sea.
US President Donald Trump suggested that Iran was likely behind the attack on the pipeline, as he stated on Saturday that Iran was most likely responsible.
Coaxial pipeline with very high capacity
The attacks on the Saudi pipeline hit a particularly sensitive point: Through these pipelines extending for more than 1,200 kilometers, up to seven million barrels of oil per day can be pumped from the Gulf region to be shipped west to the Red Sea.
Since the outbreak of the Iran war at the end of February and the subsequent almost complete blockade of the Strait of Hormuz due to Iranian threats and attacks on ships, Saudi Arabia has been trying to use this pipeline to prevent a further collapse in its oil exports.
Before the war, Saudi Arabia was the second largest oil producer after the United States and the most important global exporter of this raw material, which is of central importance to the entire global economy.
Expert: Price rise is likely
For expert Walter Boltz, former head of the Energy Regulatory Authority, the rise in oil prices again is a certainty, as he told the Wall Street Journal. He added that at least a short-term jump is imminent.
He pointed out that the sustainability of this rise depends on how quickly and credibly Saudi Arabia presents a plan to repair or restart the vital pipeline. However, the expert dispelled fears of an oil shortage, noting that there is abundance in other regions that can compensate for at least part of the shortage, but the price effects will remain.
The Houthis are advancing towards the Bab al-Mandab Strait
Meanwhile, the main alternative to Saudi Arabia's route through the Strait of Hormuz - shipping through the Red Sea and the Bab el-Mandeb Strait towards Asia - also faces a growing threat.
According to Yemeni government sources, the Houthi rebels took control of the entire Red Sea coast of Yemen and islands of strategic importance. Thus, the Houthis have much greater influence over the Bab al-Mandab Strait. Although a Houthi spokesman confirmed on Friday that maritime navigation is safe, he clarified that this does not apply to Saudi ships.
Noticeable rise in oil prices
Analyst Hammad Hussein, from the consulting firm Capital Economics, agrees with Walter Boltz's opinion. Hussein stated, in a statement to the Wall Street Journal, that the Houthi advance and damage to the pipeline may push oil prices towards $120 per barrel. He added that it ultimately depends on the extent of the damage to the pipeline.
Some analysts believe that oil prices may rise further if the conflict continues for a longer period. However, the price is currently still a good distance below this year's high of around $126 at the end of April.
The price of crude oil has recently recorded a noticeable increase. The price of a barrel of reference Brent crude from the North Sea for November delivery on Friday briefly reached approximately 110 US dollars. Before the Iran war in February, the price of oil was about $70 per barrel. At that time, about a fifth of global oil and liquefied natural gas exports passed through the Strait of Hormuz.
The "pincer" tightens around Saudi Arabia
In eastern Saudi Arabia, the external passage from the Persian Gulf through the Strait of Hormuz is largely closed, and in the west the Bab al-Mandab Strait is closed, imposing severe restrictions on potential export routes. The Suez Canal corridor remains open as a bottleneck available for movement.
However, transportation to customers in Asia from the Saudi west coast via the Canal, the Mediterranean and then around Africa takes several additional weeks and is accordingly expensive. This export route also partly requires the operation of the "East-West" pipeline, because the largest Saudi oil fields are located in the east, near the Gulf.
The Bab al-Mandab Strait is considered narrower than the Strait of Hormuz, as its width at its narrowest point is only about 20 kilometers. Therefore, it is unlikely that a relatively safe corridor from attacks could be established there — unlike the Strait of Hormuz along the Omani coast, the Institute for the Study of War (ISW) wrote in an analysis.
Iran hints at the possibility of opening the Strait
For his part, Iranian President Masoud Pezeshkian, according to the ISNA news agency, hinted at the possibility of reopening the Strait of Hormuz. But Pezeshkian linked this step to ending the US naval blockade and the US Army’s military operations.
According to Bazeshkian, on Monday in the Omani capital, Muscat, Oman and Iran signed an agreement on new shipping routes in the strait. Both countries share a border overlooking the Strait of Hormuz. The agreement is then scheduled to be handed over to the International Maritime Organization.
Edited by: Salah Sharara
