Attack on ship in the Strait of Hormuz and Saudi pipeline closure drive up energy prices

Concerns about energy supplies are growing following an attack on a ship in the Strait of Hormuz and the closure of an important Saudi oil pipeline. The British Maritime Trade Organization (UKMTO) said it had received reports that a projectile had hit a ship in the strait.

The extent of the damage and the condition of the crew were initially unknown. Unlike in most previous cases, the authority did not provide any information about the exact location of the incident. This left it unclear whether the ship was hit off the coast of Oman or closer to the Iranian coast. It also remained unclear who was responsible for the attack.

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The ongoing attacks in the widening Middle East conflict could further drive up energy prices. ‌Last week, the price of Brent crude oil rose again above $100 per barrel.

Saudi Arabia has closed pipeline

The incident came a day after Saudi Arabia said it had temporarily closed its east-west pipeline as a precautionary measure. The reason was ‌a drone attack that, according to Baghdad ‌and Riyadh, came from Iraq, where Iranian-backed militias operate. The 1,200-kilometer-long pipeline has been the main route for global oil supplies from the Middle East for the past six months, as the Strait of Hormuz was largely closed due to the war. It transported four to five million barrels per day, equivalent to four to five percent of global supply. US President Donald Trump said Iran was likely responsible for the attack on the pipeline.

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Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, called Trump on Thursday and asked for military help in the fight against the Houthi rebels, three people familiar with the matter told the Reuters news agency. Washington has initially rejected direct interference, but has promised support through intelligence information. The Iran-backed Houthi rebels in Yemen recently expanded their attacks and captured the strategically important island of Perim in the Bab al-Mandab Strait on Friday.

Diplomatic efforts to resolve the conflict have so far come to nothing. Iran and the Arab Gulf states plan to meet in Oman on Monday to discuss the future of the Strait of Hormuz. However, a senior Iranian official dampened expectations of a breakthrough. Iran is demanding recognition of its control over the Strait of Hormuz, which would allow the country to charge fees for the passage of ships. The USA rejects this.