Heightened conflict between Saudi Arabia and Iran-backed Houthi rebels, alongside attacks on infrastructure, has led to a reduction in Saudi oil output and an increase in global fuel prices. On a recent Monday, Brent crude reached a near-four-month high of approximately $108 per barrel, up from an average of $67 per barrel recorded in late February before the start of the war on Iran. A drone strike on the Saudi East-West pipeline, which typically transports crude 745 miles to the Red Sea, has forced a temporary shutdown of the facility.
Saudi Arabia utilized the pipeline as an alternative for exports after shipping traffic through the Strait of Hormuz was reduced due to the war between U.S. and Iranian forces. The pipeline was originally constructed during the 1980s to bypass similar threats in the Persian Gulf and was recently restored to full capacity in April after earlier war damage. While no group has claimed responsibility for the latest strike, the Iraqi government stated the attack originated from its territory, where Iran-backed militias are active; Iran has denied involvement.
Saudi crude oil production dropped to under 6 million barrels per day in August, a decrease from 8 million barrels the previous month and below the kingdom's target of 10.42 million barrels per day, according to the International Energy Agency (IEA). Two regional officials stated the pipeline may require three to five weeks to return to full operation. Although Houthi rebels have stated the Red Sea remains safe for other global tanker operators, they have declared a blockade on Saudi Red Sea ports and seized Perim island.
For households, these disruptions translate to higher costs at the fuel pump. Oil prices have risen from $67 to $108 per barrel since February. If shipping companies divert vessels around the Cape of Good Hope in southern Africa to avoid the Red Sea, the longer transit times result in higher costs.
The situation establishes a potential long-term shift in regional trade control. Analysts April Longley Alley and Allison Minor noted in Foreign Policy that Houthi control over the Bab el-Mandeb alongside Iranian control of Hormuz could make these entities "gatekeepers" for trillions of dollars in annual trade. While the IEA reports that non-Saudi shipping volumes through the Red Sea have remained relatively stable, further escalation could pressure shipowners to seek alternative routes. The pipeline is estimated to remain offline for at least three more weeks.