There was plenty of news out of the war-torn Middle East over the weekend, and none of it was good if you had hoped oil prices were back on the way down.
Here are the key points:
Another vessel was struck in the Strait of HormuzThe key Saudi East-West oil pipeline shut after drone attackHouthi offensive on the Red Sea coast has given them control of the narrow Bab el-Mandeb Strait
While global oil benchmarks dropped about 2% on Friday, oil traders are bracing for prices to head back up today after the weekend’s disturbing news.
It’s worth noting, US retail diesel prices hit another record high above $US6.20/gallon ahead of the weekend.
The British maritime security agency ‌UKMTO said on Sunday that a vessel had been struck by a projectile as it moved through the Strait of Hormuz, causing a fire and forcing the crew to be evacuated.
Iran, for its part, said one person was killed, and four crew wounded aboard an Iranian commercial vessel struck off its coast.
In Saudi Arabia, state media released video of damage to homes and a mosque from the purported latest cross-border attack by the Houthis, in Jazan province in the south.
The Houthis claimed separately to have struck a Saudi military base in a neighbouring province.
Southern Saudi cities have experienced regular alerts since last week, culminating in drone strikes on Friday that knocked out the 1,200-km East-West pipeline across the Arabian Peninsula that has served as the main route for global supplies of Middle East oil bypassing the Strait of Hormuz.
That same day, the Houthis captured Perim Island, which lies in the middle of the Bab El-Mandeb, the “Gate of Tears” strait that controls the mouth of the Red Sea.
The attack on the Saudi pipeline threatens up to 4% of the world’s oil supply.
Reuters is reporting conflicting assessments about the damage, with one source suggesting it could take as long as five to six weeks to repair, while another said it could be fixed sooner and could resume pumping partially while repairs are ongoing.
For its part, Saudi Arabia has not given details about the duration of repairs.
The East-West pipeline, which can carry as much as 4 million barrels of crude a day, was seen very much as the Saudi Plan B to export oil out through the Red Sea, rather than the hazardous trip in Iran’s crosshairs through the Strait of Hormuz.
However, with the Iran-backed Houthi militia advancing from its hilltop strongholds and seizing control of Perim Island in the narrow Bab El-Mandeb, oil importers will be hoping the Saudis have a Plan C ready to go.
With Reuters