Gulf states cancel Hormuz talks as Houthis strike Saudi airbase, oil tops $107

Gulf foreign ministers pulled the plug on a planned meeting with Iran to discuss reopening the Strait of Hormuz on Monday, the same day Yemen’s Houthi forces launched a barrage of ballistic missiles and drones at Saudi Arabia’s King Khalid Air Base. The Houthis called the strike retaliation for more than 300 Saudi airstrikes on Yemen over a five-day stretch.

The timing could hardly be worse. A separate drone attack late last week, which Riyadh attributed to Iran-backed fighters in Iraq, knocked Saudi Arabia’s East-West pipeline offline. That pipeline is the kingdom’s only crude export route that bypasses the Strait of Hormuz, meaning both of Saudi Arabia’s primary channels for getting oil to the global market are now either blocked or damaged.

Brent crude responded by climbing to roughly $107.54 per barrel, while West Texas Intermediate hit about $102.93. Both benchmarks surged nearly 3% in early Asian trading.

Two chokepoints, zero alternatives

The Strait of Hormuz is the narrow waterway between Iran and Oman through which roughly one-fifth of the world’s daily oil consumption passes.

Saudi Arabia built the East-West pipeline precisely for scenarios like this: a backup route capable of moving several million barrels per day from its eastern oil fields to Red Sea export terminals on the western coast. The pipeline shutdown alone threatens an estimated 4% of global oil supply.

The meeting in Oman between Gulf Cooperation Council states and Iran was supposed to be a step toward de-escalation. Oman cited consensus interests when confirming the postponement. Iran’s foreign ministry noted that Saudi Arabia had requested the delay.

The military escalation

The Houthi strike on King Khalid Air Base in Khamis Mushait involved dozens of missiles and armed drones, according to the group’s own claims. The attack came after what the Houthis described as more than 300 Saudi airstrikes on Yemen in just five days.

The drone strike on the East-West pipeline, attributed to Iran-backed militias operating from Iraqi territory, adds another dimension. This wasn’t a Houthi operation. It was a separate attack, from a different country, by a different proxy group, all hitting Saudi energy infrastructure within days of each other.

Energy prices and the inflation ripple

Brent at $107 and WTI above $102 are levels that make central bankers uncomfortable. Energy costs feed into virtually every corner of an economy, from transportation to manufacturing to food production.

The near-3% single-session jump in both benchmarks reflects more than just supply math. Traders can price in a known supply disruption. What they struggle to price is a region where diplomacy is failing, military strikes are escalating, and the two main export routes for the world’s largest oil-producing area are both compromised at the same time.

The situation also complicates OPEC+ dynamics. Saudi Arabia has been managing production cuts alongside Russia and other producers to keep prices within a target band. An involuntary supply reduction caused by infrastructure damage removes the kingdom’s ability to calibrate output.

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