Tensions in Middle East energy transit routes continue to escalate. A crucial Saudi oil pipeline came under attack and caught fire on Thursday, while Yemen's Houthi forces have claimed sweeping territorial gains along the Red Sea coast in recent days, accompanied by a sharp decline in vessel traffic transiting the Bab el-Mandeb Strait, which has fallen to single digits.

According to US media reports from Friday, a projectile strike hit a vital Saudi oil pipeline on Thursday, sparking a blaze. This conduit, responsible for transporting crude from eastern Saudi oil fields to export facilities on the Red Sea coast, serves as a significant alternative route for the kingdom should traffic through the Strait of Hormuz become restricted.

During Friday's US stock market session, international crude oil futures showed a relatively muted reaction to the news of the Saudi pipeline attack, maintaining an intraday loss of more than 2%.

Earlier on Friday, reports citing a video statement from Houthi military spokesman Yahya Saree detailed a large-scale offensive launched on September 3rd against "Saudi-backed forces" on Yemen's western coast. The Houthis claim to have seized six districts in the Taiz and Hodeidah provinces within nine days, an area totaling 5,400 square kilometers. The statement further asserted that the operation resulted in hundreds of enemy casualties or captures, the interception of 32 Saudi fighter jet sorties, and the downing of 9 drones.

Following the Houthi capture of the Red Sea port city of Mocha, shipping through the Bab el-Mandeb Strait has been significantly impacted. Reports indicate that by 3 PM local time on Thursday, only 6 vessels had passed through the strait, compared to 30 ships on Wednesday and 26 and 29 on Tuesday and Monday respectively. The Houthis' continued advance towards the strait and its surrounding islands is altering the strategic landscape of the Red Sea shipping lane.

However, a potential de-escalation signal emerged on Friday. Yemen's Houthi Supreme Political Council issued a statement declaring that hostilities had ceased in the western coast provinces, urging parties to pressure Saudi Arabia to avert further escalation.

The Critical Role of the Saudi Pipeline Amidst Hormuz Tensions

Reports from CNN indicate that a projectile struck facilities along Saudi Arabia's East-West pipeline on Thursday, causing a fire. A US official's preliminary analysis suggests an attack on a pump station adjacent to the pipeline. Satellite imagery reveals extensive fire damage at one pump station on Friday, while another image from Thursday showed a smaller blaze with thick black smoke near a separate station.

The perpetrator of the attack remains unclear, and it is unconfirmed whether the pipeline itself sustained damage. However, a US official suggested the attack may have involved drones launched from Iraq. The timeline for repairing the damaged facilities is also unknown.

Satellite monitoring data detected 9 significant fires near the East-West pipeline on Thursday. Notably, at least 6 of these appear to correspond with flare pits along the pipeline route, which are used for emergency venting and burning of oil and gas, suggesting not all detected fires necessarily indicate deliberate attacks.

The core function of this pipeline is to enable Saudi Arabia to bypass the Strait of Hormuz, shipping a portion of its crude to the Red Sea for maritime export. Continued disruption to this route would weaken the kingdom's ability to manage risks to Hormuz shipping.

Adding to the context on Friday, reports citing Axios indicated that Saudi Crown Prince Mohammed bin Salman made two phone calls to former US President Donald Trump on Thursday, urging a US strike against the Houthis, a request that was declined. US officials have stated there is currently "no intention" of taking direct military action against the Houthis, indicating Washington is still avoiding opening a new military front against the group even as Saudi energy infrastructure is attacked and Houthi control expands.

Houthi Claims and the Impact on Strait of Bab el-Mandeb Traffic

Data shows a clear downward trend in vessel transits through the strategically vital Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden. According to Saudi logistics magazine Middle East Logistics, only 6 ships were tracked passing through the strait by 3 PM Thursday, with 5 leaving and 1 entering. This compares to 30 ships on Wednesday and 26 and 29 on Tuesday and Monday, respectively. As the Houthis extend their control along Yemen's western coast, security risks for shipping companies have intensified.

Detailing their recent offensive claims on September 11th, the Houthi spokesperson asserted the attack, which began September 3rd, targeted "Saudi-backed forces," seizing six areas across Taiz and Hodeidah provinces, covering 5,400 square kilometers. They also claimed the operation engaged seven enemy divisions and 38 brigades, causing hundreds of casualties or captures and liberating several Houthi prisoners.

The Houthis further stated they intercepted 32 sorties by Saudi warplanes and downed 9 drones during the campaign. These figures stem primarily from unilateral Houthi statements and cannot be independently verified, thus they should be viewed as a summary of their claimed military achievements rather than an indication of ongoing advances towards the Red Sea coast on Friday. Indeed, reports on Friday cited the Houthi Supreme Political Council's declaration that fighting in the western coast provinces had ceased.

Diplomatic Efforts on Hormuz Scheduled for Monday Meeting

Contrasting with the military risks in the Red Sea, new diplomatic coordination signals have emerged concerning the Strait of Hormuz. Reports citing Iran's Fars News Agency on Friday quoted Iranian Foreign Ministry spokesman Esmail Baghaei announcing that Iran, Iraq, and other Persian Gulf littoral states would hold a regional meeting in Oman on Monday to discuss establishing safe shipping routes for commercial traffic in the Strait of Hormuz.

Prior reports from the Financial Times indicated that foreign ministers from the six Gulf Cooperation Council (GCC) states planned to meet with Iranian Foreign Minister Abbas Araghchi on Monday in the Omani coastal city of Salalah. The talks, led by Oman, aim to secure support for interim arrangements to regulate commercial shipping through the strait.

Following the Financial Times report, Baghaei stated on social media that Monday's meeting in Oman would include Iran, Iraq, and other Persian Gulf nations, covering regional issues and outcomes of negotiations between Tehran and Muscat regarding secure shipping routes in the strait. He also noted that Tehran and Muscat had reached an understanding on temporary routes, reaffirming Iran's commitment to maritime security while cautioning that it could not guarantee safe navigation amid sustained US naval blockades and economic warfare.

These diplomatic developments, combined with the Houthi announcement of a ceasefire on the Red Sea's western coast, offer partial explanation for Friday's pullback in oil prices from earlier intraday highs.

Up until Thursday, Brent crude had posted five consecutive daily gains, accumulating a 12.68% increase, while WTI recorded eight straight winning sessions with a cumulative 22.88% rise. Early Friday, WTI dipped to $98.48 per barrel, down 3.9% on the day, and Brent fell to $103.50 per barrel, down more than 3.8%.

Despite the fresh reports of the Saudi pipeline attack during Friday's US trading session, international crude prices did not significantly reverse their downward trend. WTI remained above $99.90, and Brent hovered around $105, still down over 2%.

This suggests that, based on Friday's market pricing, the supply risks stemming from the Saudi pipeline attack and reduced Bab el-Mandeb traffic were, for now, outweighed by the potential interim commercial arrangements for the Strait of Hormuz and the halt in fighting on the Red Sea's western coast.