Oil price hike fears as Houthi rebels strike vital Saudi Arabian pipeline in the Gulf
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The threat of oil price rises is looming after drone strikes forced Saudi Arabia to close its critical Petroline pipeline.
The move follows a lightning advance by Iranian-backed Houthi fighters who seized Yemen’s entire Red Sea coast.
They now hold three key islands, and the apparently co-ordinated attacks have inflicted a major blow to Saudi Arabia, the world’s largest crude oil exporter.
Until now, it had sought to circumvent Iran’s bid to close the Strait of Hormuz – the main Gulf shipping route for Asian markets – by piping oil 745 miles west to its Red Sea port of Yanbu.
But now oil tankers heading south from Yanbu are potential targets for Houthi positions on the south Yemen coastline, with a particularly dangerous transit through the 16-mile-wide Bab al-Mandab pinch point.
The Houthis can now attack Saudi tankers from the shoreline using short-range anti-shipping missiles or drone boats.
This image taken from undated video released by the Houthi-run Al-Masirah television channel on Saturday, Sept. 12, 2026, shows Houthi fighters chanting and raising rifles atop a military vehicle in Dhubab district, Taiz province, Yemen, according to the channel
A satellite image shows black smoke rising from an area of Saudi Arabia's East-West oil pipeline south of Medina, Hejaz Region, Saudi Arabia September 10, 2026
Houthi rebels claim navigation remains ‘safe for all companies except Saudi vessels’. However, if there is a coordinated attack by foreign powers, they will close Bab al-Mandab indefinitely.
Even if the Petroline re-opens, Asia-bound exports would have to move north through the Suez canal into the Mediterranean, then round the Cape of Good Hope.
Experts say increased shipping costs would heap further pressure on the price of crude – already above $100 a barrel – maintaining high fuel and energy costs for consumers as winter approaches.
The Petroline was pumping five to seven million barrels a day, about 5 per cent of global demand, until it was attacked last week with drones launched from inside Iraq by Iranian-backed militia.
This represents a quarter of the volume exported through the Strait of Hormuz prior to the Iran War. The attack has embarrassed Iraq’s government, which has close ties with the Saudis.
It confirmed the drones originated inside its territory, pledged to investigate and sacked the military commander leading counter-militia operations in its southern Maysan province. The Saudis expressed the ‘strongest condemnation’ but will not retaliate at the request of Baghdad.
Meanwhile, the internationally recognised Yemeni government yesterday launched a counter-offensive against Houthi positions around the Red Sea port of Mocha. Saudi Crown Prince Mohammed bin Salman has personally urged President Trump to take military action against them, but he has declined.
File image: Yemen's Houthi rebels march during a mobilization campaign in Sanaa, Yemen, Thursday, Sept. 10, 2026
The Bab al-Mandeb Strait connects the Red Sea with the Gulf of Aden and is used as an alternative to the Strait of Hormuz, which Iran has effectively shut down
Speaking on his arrival in Dublin yesterday, Mr Trump told reporters the Houthi offensive ‘would work out just fine’ and that its leaders had contacted the US to make clear the group ‘doesn’t want to fight with us’.
He was relaxed about the threat posed to Red Sea shipping, saying that only Saudi Arabia was affected and they would ‘get that straightened out’. He repeated his assertion that the Iran War would end soon, bringing oil prices down.
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