Oil and gas prices have climbed higher after Saudi Arabia shut down a vital oil pipeline in response to a series of drone attacks.
The world’s financial markets continue to be rocked by fighting in the Middle East that is causing further disruption to global supply of the key commodities, sending wholesale prices surging.
The price of a barrel of Brent crude oil was up by around 3% to 108 US dollars (£80) on Monday morning.
UK natural gas prices were rising by around 5% to 209p per therm, which is a unit of heat energy – remaining at the highest level since December 2022.
Over the weekend, Saudi Arabia was forced to shut down its east-west pipeline which has been a crucial route for oil exports since the Iran war disrupted shipping in the Strait of Hormuz.
Saudi oil exports through the Red Sea port at the pipeline’s end have more than doubled since the Iran war began, bypassing the Strait of Hormuz, according to the International Energy Agency (IEA).
The Saudi foreign ministry blamed the attacks on several drones that came from Iraq and Iraq’s government pledged to investigate the attacks.
Richard Hunter, head of markets at Interactive Investor, said: “This east-west pipeline, which links the Gulf to the Red Sea, had been moving several million barrels each day and inevitably causes additional supply constraints.
“The development also suggests that the conflict is as far away from resolution as ever and the inflationary impacts of elevated oil products are starting to become keenly felt.
“The CPI (Consumer Prices Index) report in the US, for example, showed that the major driver of the August inflation increase was gasoline, which increased by 3.9% over the month.”
In the UK, wholesale fuel prices, particularly for diesel, have continued to surge on the back of the oil spikes and refining issues.
Higher wholesale gas prices are also sparking fears about the impact to household energy costs over the winter months.
The IEA said in a report last week that it was now predicting 2026 worldwide oil consumption to drop by 2.5 million barrels a day versus 2025 due to the supply disruption.
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