Oil Prices Fall as Saudi Arabia Opens New Supply Routes After Pipeline Attack
Saudi Arabia is rerouting oil exports after a drone attack shut down a major pipeline, while diesel prices hit a record high and Houthi rebels tighten their grip on a key Red Sea shipping lane.
Oil prices dropped after Saudi Arabia began offering ship-to-ship crude transfers to keep exports flowing following a drone attack that forced the shutdown of a major pipeline [242941][239970]. The pipeline was hit by strikes launched from Iraq, adding new pressure on the kingdom's oil export network [239970].
The disruption comes as Iran-backed Houthi forces have seized strategic positions along Yemen's Red Sea coast, including Perim Island, Mokha, and Dhubab, placing them closer to full control of the Bab el-Mandeb Strait [238433][239059]. That narrow waterway, just 18 miles (29 kilometers) wide at its narrowest point, carries about 12 percent of global trade between Europe and Asia [238433]. Houthi leader Abdul Malik al-Houthi has called the offensive his group's biggest military victory in years, and analysts warn the rebels could now halt shipping through the strait [242495].
The fighting has displaced nearly 50,000 people in western Yemen, where aid workers say entire villages have emptied and families are trapped near front lines with food running low [239277].
In Washington, officials met with Houthi leaders in Muscat, Oman, and afterward declined to intervene on Saudi Arabia's behalf to push back the Houthi advance [242821]. The Houthis told US officials their 2025 ceasefire still holds and said they have no plans to attack American shipping in the Red Sea, claiming only Saudi-linked vessels are targets [242821]. President Trump is scheduled to meet Gulf leaders at the United Nations next week to discuss ending the wider Iran war as ceasefire talks remain stalled [242930].
The combined pipeline shutdown and Houthi advances have raised new risks for international energy supplies [239970]. At the same time, diesel prices in the United States hit an all-time high of $6.31 per gallon, with transport companies warning the costs cannot be sustained [242940].
Elsewhere, traffic through the Strait of Hormuz — the world's most important oil passage, carrying roughly one-fifth of global oil consumption daily — has fallen sharply for reasons that are not yet confirmed [241732]. Two sailors remain missing after the oil tanker El Gaia caught fire in the strait; Iran says the ship struck mines, while the United States says a missile and drone strike caused the blaze [242426].
The Middle East supply crisis has benefited at least one major refiner: Nigeria's Dangote Petroleum Refinery reported a net profit of $1.82 billion for the first half of 2026, with revenue exceeding $13 billion, a sharp turnaround from a $476 million loss for all of 2025 [242879].