Fears of new global oil supply crisis as Houthi militants seize two strategic Red Sea islands following Saudi pipeline attack

Fears are growing of a new global oil supply crisis after Yemen's Houthi rebels seized the strategic islands of Greater and Lesser Hanish in the southern Red Sea, following an attack on a Saudi pipeline.On Tuesday morning, Brent crude rose 1.17 per cent to $106.92 a barrel, while the average US diesel price surpassed $6 a gallon for the first time last week as the war, compounded by Ukrainian strikes on Russian refineries, further squeezed global supplies. The Iran war has forced Saudi Arabia to shift its exports away from the Persian Gulf, since Iranian attacks have stifled shipping through the gulf's sole exit, the Strait of Hormuz.The Kingdom has relied on the East-West Pipeline, which runs 1,200km across the breadth of the country, to move its crude production from Gulf ports to the port of Yanbu on the Red Sea. From there it can be put on tankers for export. But authorities were forced to shut down the pipeline after an attack Thursday that Saudi Arabia blamed on drones from Iranian-backed militias in Iraq.Repairing the damage, including at a major pumping facility, could take three to five weeks, officials have said. The pipeline may work partially during the repairs, one of the officials said, but they could not say how much oil might get through.The pipeline has been moving an average of 2.6 million to four million barrels per day since late August – a quantity that will be lost to the market if the pipeline's flow stops completely, according to an analysis issued Monday by Rystad Energy, a Norway-based research firm. A combination of satellite images shows the Saudi Arabia East-West pipeline before (top) and after (bottom) attacks Vessels transit the Bab el-Mandeb Strait off the coast of southern YemenIt said 'the market could initially manage it,' but a longer shutdown would 'require a major reallocation of global crude flows'. Meanwhile, Yemen's Iranian-backed Houthi rebels continued to expand their threat to Saudi shipping routes out of the Red Sea by capturing the strategic islands of Greater and Lesser Hanish, government and Houthi officials said Monday.The islands lie 160km north of the Bab el-Mandeb Strait. The strait is a choke point that connects the Red Sea to the open ocean and Saudi Arabia's key Asian markets.The Houthis' advance also puts them just 20 miles from the US military base in the tiny Horn of Africa nation of Djibouti, on the other side of the Bab el-Mandeb Strait.For more than a month, the Houthis have been striking Saudi oil infrastructure and shipping in the Red Sea, stepping up pressure on global oil prices and boosting Iran's leverage in its war with the US.Houthi threats have kept the Kingdom on high alert, with air raid warnings sounding across the country daily, while a series of ballistic missile and drone attacks by the group wounded 13 civilians on Monday. The Houthi advances have seemed to come with little resistance from Saudi-backed Yemeni government forces. The rebels deployed on the Hanish islands after hundreds of government-allied forces withdrew from the archipelago, according to two government officials and a Houthi official.Last week, the rebels seized the port city of Mokha and the island of Mayun, inside the Bab el-Mandeb Strait.Government forces are now attempting to rally and fight back. On Sunday, the military said it launched airstrikes on Houthi positions in Mokha, the coastal town of Dhubab and elsewhere in Taiz province.A rebel spokesman said the Houthis fired dozens of missiles and drones at the King Khalid Airbase in the southern Saudi city of Khamis Mushait, targeting hangars, radar installations and ammunition depots. The statement on Monday by Brig. General Yahya Saree did not specify when the strikes took place but the Houthis often take hours or days to claim responsibility for attacks.Maj. General Turki al-Malki, a Saudi military spokesman, said the attacks struck civilian areas in Khamis Mushait and other nearby cities, injuring 13 civilians and damaging several houses and vehicles. He did not say whether the airbase had been hit.The Iran war has gouged Saudi oil production, which was down to six million barrels per day in August from nearly ten million in September the previous year, according to the International Energy Agency.After the war began, the east-west Pipeline carried a large majority of Saudi Arabia's oil exports, according to Rystad Energy. When Houthi attacks in the Bab el-Mandeb Strait started in late July, most of the tankers from the port of Yanbu turned north in the Red Sea toward the Mediterranean, sending their cargo through the Suez Canal or an Egyptian pipeline.That, however, dramatically increased the time and cost of delivering oil to Saudi Arabia's main clients in Asia. Also, the Houthis turned to targeting Saudi shipping in the northern Red Sea as well. The fighting in Yemen is pushing the impoverished nation back into full-fledged civil war, after a truce that largely maintained quiet since 2022. Supporters of Yemen's Houthi rebels chant and raise rifles during a rally organized to celebrate the group's capture of Mayun Island on September 11 A person passes by a display of Houthi-made mock drones and missiles at a square in Sana'a, Yemen A woman washes clothes at a makeshift camp for people displaced by clashes between Iran-aligned Houthi fighters and Saudi-backed Yemeni government forcesEven as they advance along the Red Sea, the Houthis have waged an offensive farther inland, particularly in the longtime battleground province of Taiz.The World Health Organization said more than 500 people were killed in Yemen in the last week alone, up from nearly 200 a week earlier.The Houthi rebels have made strategic gains in lightning advances, capturing territories previously held by forces of the internationally recognized government. The fighting has also displaced nearly 94,000 people who have since fled their homes.'Many of them don't have enough food or water as they had to flee with whatever they could carry. In some areas, whole villages have reportedly emptied,' said Khanzad Shah, acting head of Islamic Relief, a charity that operates in the area.Around 200 schools have been converted to shelters in southwestern Yemen to absorb an influx of families, said Basma Alloush, deputy director of communications at the International Rescue Committee, an aid group.The fighting threatens to reignite a war that for more than a decade brought disaster to Yemen, killing more than 150,000 people and driving the country to the brink of famine. Since 2014, the Houthis have controlled the north, including the capital, Sanaa, and much of the western heartland of the country where most of the population is located.The internationally recognized government, backed by an array of disparate militias, controls the south and east, including the key southern port of Aden.Meanwhile, Iranian Foreign Ministry spokesman Esmail Baghaei said Monday that Saudi Arabia had 'demanded' that a meeting bringing together Iran with other regional countries to discuss the Strait of Hormuz be scrapped 'for the time being'.Baghaei called the meeting, which was to be hosted by Oman, a 'proper opportunity' to restore security in the region.The spokesman said that an agreement between Iran and Oman on the Strait of Hormuz has been finalized and it will be announced later.Saudi Arabia had submitted amendments to the agreement, citing concerns that it could have lasting implications for the Strait of Hormuz, negatively affecting other Gulf Co-operation Council countries, according to a Gulf official.