Crude oil prices jumped by nearly 3% in early trading on Monday as fresh attacks across the Middle East, disruption to a major Saudi crude export route and stalled diplomatic efforts heightened concerns over a prolonged supply disruption.
As at the time of writing at 06:15 am (WAT), Brent crude was trading at $107.30 per barrel, up 2.55%, while West Texas Intermediate (WTI) stood at $102.70 per barrel, up 2.61%. The two benchmarks had earlier gained more than 3% before paring some of their advances.
The latest rally followed the shutdown of Saudi Arabia’s East-West Pipeline after drone attacks, with the disruption placing export flows equivalent to roughly 4% of global oil supply at risk if the pipeline is not restored within days.
The security situation also worsened around key regional transit routes. The Houthis claimed to have launched a large-scale missile and drone attack against Saudi Arabia, while Saudi state media separately reported that a projectile fell in the Jazan region.
The Strait of Hormuz remained another major source of supply uncertainty after the UKMTO reported that a vessel within the waterway had been struck by an unknown projectile. The Associated Press subsequently reported that an Iranian cargo vessel was struck off Qeshm Island, although it was unclear whether both reports referred to the same incident.
Diplomatic efforts to ease the disruption also suffered a setback after Oman’s Foreign Minister, Badr Albusaidi, announced the postponement of a planned meeting between Gulf states and Iran because of a lack of consensus. The meeting was expected to discuss a potential arrangement for managing shipping through the Strait of Hormuz.
Meanwhile, the Houthis have reportedly expanded their territorial control in Yemen and reached Perim, a strategically important island near the Bab el-Mandeb Strait. The development has added to concerns over the security of another critical route for oil and other energy shipments between the Middle East and global markets.
For the oil market, the immediate concern is no longer limited to crude production. Disruptions to export infrastructure and maritime transit routes are increasing the risk that available barrels may not reach international markets normally, potentially keeping the geopolitical premium elevated.
The situation also carries implications for Nigeria’s downstream market. Sustained crude prices above $100 per barrel could increase petroleum product replacement costs and put further pressure on the economics of imported products and domestic refinery pricing, particularly if the disruption persists.
Market direction will now depend heavily on the restoration of Saudi Arabia’s East-West Pipeline, developments around the Strait of Hormuz and whether the postponed Gulf-Iran talks resume. Until there is greater clarity on these fronts, continued attacks and infrastructure disruptions are keeping the balance of risks firmly tilted towards higher crude prices.