Oil Prices Near 4-Month High After Iran-Oman Hormuz Talks Postponed, Saudi Pipeline Attack Adds Pressure
Oil prices climbed to their highest level in almost four months on Monday after Oman postponed a planned meeting with Iran and other regional countries on the future control of the Strait of Hormuz, while fresh fighting in Yemen and damage to a key Saudi pipeline heightened concerns about global energy supplies.
Brent crude, the international benchmark, rose 3.2% to $107.94 a barrel. U.S. crude also gained 3.2%, reaching $103.26 a barrel. Brent had traded near $72 before the U.S.-Iran war began in late February, underscoring how quickly the conflict has reshaped the market.
Oman's foreign minister, Badr Albusaidi, said the Muscat meeting was postponed 'in the interests of consensus.' Iranian officials said the talks were delayed at the request of some regional countries. Iranian Foreign Ministry spokesman Esmaeil Baghaei said Saudi Arabia had demanded that the meeting be called off for the time being, describing it as a missed 'proper opportunity' to restore regional security.
Iran and Oman, which sit on opposite sides of the Strait of Hormuz, had been working on a mechanism to manage commercial shipping through the vital waterway, with Pakistan helping mediate. Officials from the two countries had expressed optimism in recent weeks that an agreement was near. Baghaei said an Iran-Oman agreement on the strait had been finalized and would be announced later.
But Saudi Arabia has submitted amendments to the emerging deal, citing concerns that it could have lasting implications for the Strait of Hormuz and negatively affect other Gulf Cooperation Council countries, according to a regional official familiar with the matter. The dispute leaves the diplomatic track unsettled at a moment when shipping through the region is already under severe strain.
Yemen fighting escalates near Bab el-Mandeb
In Yemen, Iran-backed Houthi rebels captured more strategic territory near the Bab el-Mandeb Strait, government and Houthi officials said Monday. The rebels deployed fighters to the Hanish islands, about 100 miles north of the strait's entrance, after Yemeni government forces withdrew, according to two government officials and a Houthi official who spoke on condition of anonymity.
The move followed the Houthis' capture of the port city of Mokha late last week, part of a rapid expansion of control around Bab el-Mandeb. Saudi-backed Yemeni government forces tried to counterattack over the weekend, and the Houthis fired into neighboring Saudi Arabia.
Bab el-Mandeb is a crucial alternative to the Strait of Hormuz for Saudi energy exports, but attacks on Saudi infrastructure and ships in the Red Sea by the Houthis and other Iranian-linked forces have sharply impeded shipments through the waterway. The Houthi-Saudi escalation is adding pressure on global oil supplies and prices, potentially giving Iran greater leverage in its war with the United States.
Saudi pipeline outage could last weeks
The renewed fighting comes days after a drone attack forced the shutdown of Saudi Arabia's East-West Pipeline. Saudi officials blamed Iranian-backed militias in Iraq for the strike. Two regional officials told The Associated Press that the pipeline will likely be largely out of service for weeks, with repairs expected to take three to five weeks, including work at a major pumping facility. One official said the line may operate partially while repairs are underway.
The 745-mile pipeline can carry up to 7 million barrels of oil a day from eastern Saudi Arabia to Yanbu Port on the Red Sea. It is central to the kingdom's strategy of shifting oil exports away from the Persian Gulf and the Strait of Hormuz, where Iranian attacks have stifled shipping. Aramco, the state oil company that operates the pipeline, did not immediately respond to a request for comment. Saudi Arabia's government-run Center for International Communication said it was looking into an AP inquiry about the repair timeline.
Iran's foreign minister denied any Iranian involvement in the pipeline attack. Foreign Ministry spokesman Baghaei accused the United States of producing 'false news' and said Washington was trying to deepen divisions in the region. No group claimed responsibility for the attack, though Saudi Arabia has previously accused Iran-backed militias in Iraq of targeting its oil infrastructure.
Shipping warnings and U.S. escorts
The Persian Gulf Strait Authority, an Iranian body established to exert control over the Strait of Hormuz, said Monday it had updated its list of vessels deemed to be violating its regulations. It warned maritime insurers and other industry bodies against providing services to the listed ships, saying insurers should protect themselves from potential financial impacts.
The warning came as U.S. Energy Secretary Chris Wright said the rolling weekly average of oil shipments transiting the Strait of Hormuz under U.S. Navy escort was rising and would continue to rise, according to Reuters. Wright said the seven-day average has been climbing and that a single-day peak of 18 million barrels passed through on September 1.
Iran insists that all ships wishing to transit the strait coordinate with the Persian Gulf Strait Authority. It has repeatedly targeted vessels that ignore that requirement and try to use a southern route close to Oman's coast, where the U.S. military has been escorting ships.
Separately, Egypt rejected a proposal from Yemen's Iran-backed Houthis for direct talks to coordinate maritime traffic through Bab el-Mandeb and the Red Sea, according to the Qatari outlet Al-Araby Al-Jadeed. The proposal was reportedly passed by a Houthi official to the International Chamber of Shipping in London, which then contacted Egypt's maritime chamber.
A senior Egyptian source said the request was rejected outright by Suez Canal Authority Chairman Osama Rabie, who argued that responding to the Houthis could amount to implicit recognition of a group not internationally recognized as Yemen's legitimate government. The source said Egyptian authorities referred the proposal to security agencies to handle outside official institutions. Egypt's goal, the source added, is to prevent attacks on vessels, restore freedom of navigation and ensure the safety of crews regardless of nationality, while avoiding any arrangement that could let the Houthis or another party assert authority over the strait.
Regional diplomacy and nuclear tensions
In Jeddah, Saudi Crown Prince and Prime Minister Mohammed bin Salman met Admiral Brad Cooper, head of U.S. Central Command, on Monday, according to the Saudi Press Agency. The meeting covered bilateral relations and the latest regional developments. Saudi Minister of State and national security adviser Musaed bin Mohammed Al-Aiban also attended.
The meeting came days after the pipeline attack. Axios reported that bin Salman last week asked President Trump to bomb positions held by Iranian-backed Houthi troops, but Trump declined.
At the United Nations nuclear agency's annual gathering in Vienna, Iran condemned the exclusion of the head of its Atomic Energy Organization, saying it constituted a serious breach of Tehran's rights as a member nation. Iran's ambassador to the IAEA, Reza Najafi, told delegates that denying access contravened both the letter and spirit of the legal framework governing attendance at IAEA meetings. He criticized Austria, the host country, saying its decision not to grant a visa to Mohammad Eslami, the Atomic Energy Organization chief, violated the host country's obligations.
The U.S. ambassador to the U.N. in Vienna, Preston Wells Griffith, said Austria's request for an exemption to standing international sanctions was denied after Washington objected to the IAEA committee. He said the United States remains focused on a diplomatic solution to Iran's nuclear program but could not allow a U.N.-designated official to travel without meaningful cooperation on nuclear safeguards.
On another diplomatic front, Iranian President Massoud Pezeshkian said Sunday that Iran and the United Arab Emirates want to 'turn the page' after a meeting with Abu Dhabi's crown prince, Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, in India on the sidelines of the BRICS summit. 'For the first time since the war and the incidents that occurred in the Persian Gulf, we had a constructive exchange with the crown prince of Abu Dhabi,' Pezeshkian said, adding that both sides agreed to look to the future and build it together.
Relations between Iran and the UAE have deteriorated since the broader Middle East war began. After the United States and Israel launched joint strikes on Iran at the end of February, Tehran retaliated against American allies in the region, with the UAE bearing much of the brunt. In August, the UAE announced it was suspending trade and financial exchanges with Iran. Dubai, the UAE's largest city, is home to a deeply rooted Iranian community and remains a vital economic lifeline for Iran as it struggles under U.S. and international sanctions.
For oil markets, the combined risks are clear: talks over Hormuz have stalled, a major Saudi export route has been damaged, Houthi advances threaten Red Sea shipping, and insurers are being warned away from vessels Iran deems noncompliant. With Hormuz already constrained by the U.S.-Iran conflict, any further disruption to Saudi exports or tanker traffic could push crude prices higher and add new inflationary pressure to the global economy.
CBS/AP contributed to this report.