Oil Routes Cut Off as Middle East War Pushes Brent Above $107

The conflict has settled into a grinding war of attrition after a brief ceasefire brokered in June collapsed in July. Iran and its network of regional proxies have since used low-cost drone and missile technology to strike critical economic targets, while the U.S. Navy maintains a tight maritime blockade of Iranian ports and Washington enforces secondary sanctions against countries trading with Tehran.

That asymmetric warfare has disrupted the strategic infrastructure built to protect the global economy from a Middle Eastern energy crisis. A coordinated campaign against key shipping lanes and overland bypass routes has squeezed the transit corridors of the Red Sea and the Arabian Peninsula, while the simultaneous disruption of Saudi Arabia’s East-West pipeline and the Bab el-Mandeb Strait has neutralized the primary backup systems intended to keep global oil flowing during a conflict with Iran.

Brent crude has climbed past $107 a barrel, and physical-market traders are paying steep premiums for immediate delivery. The market structure, known as backwardation, signals acute anxiety over near-term physical availability. The supply crunch is also being intensified by Ukrainian long-range drone strikes on Russian refining infrastructure, which have already reduced international diesel production.

The disruption comes as the fall and winter months approach, a period that historically increases heating oil and fuel consumption. The immediate strain on supply began with a drone strike on the East-West pipeline, also known as the Petroline.

Extending 745 miles from Saudi Arabia’s oil-rich Eastern Province near Abqaiq to the Red Sea port of Yanbu, the pipeline was built to let Saudi crude exports bypass the volatile Strait of Hormuz. At full capacity, it can carry up to 5 million barrels per day. Its temporary closure after the attack has threatened to remove as much as 4% of global oil supply from the market.

Government officials in Riyadh and Baghdad said the drone attack originated in Iraq rather than Yemen, where Iran-backed Shiite militias maintain active operations. The specific Iraqi militia group accused of carrying out the strike denied executing it but publicly praised the action. Saudi Arabian officials agreed not to launch retaliatory military strikes against targets on Iraqi soil in an effort to prevent a major regional escalation.

Another bypass route is exposed along the Red Sea coast. Houthi rebels in Yemen have made rapid territorial gains near the Bab el-Mandeb Strait, an 18-mile-wide choke point through which an estimated 6.2 million barrels of crude and petroleum products move each day toward the Suez Canal and European markets.

With Houthi forces holding coastal positions beside the strait, commercial shipping lines face a heightened risk of anti-ship missile and drone attacks. Tankers therefore have few safe transit options, even as the East-West pipeline remains temporarily closed.

The vulnerability of these global energy arteries has raised concerns about the limits of the U.S. military strategy. When the United States launched its military campaign against Iran in February, planners anticipated a swift, six-week operation to dismantle Iran’s ballistic missile capabilities, naval assets, and nuclear program.

Before the invasion, the Joint Chiefs of Staff warned that Iran would probably retaliate by trying to shut down the Strait of Hormuz and strike regional energy infrastructure. Those warnings were largely set aside on the assumption that Tehran would capitulate under direct military pressure.

U.S. defense officials are now privately concerned that the war could continue indefinitely. Military advisers have warned that direct retaliatory strikes to reopen the transit routes could exhaust critical U.S. munition stockpiles, including precision-guided missiles and naval interceptors, which are already at low levels. Direct intervention could also draw U.S. personnel into a broader escalatory spiral.

Israel has been sharing tactical intelligence with Saudi Arabia to help detect and intercept future drone and missile launches before they reach Saudi energy installations. Because the two countries do not have formal diplomatic relations, Israeli media reports say the intelligence transfer is being handled through U.S. military intermediaries.

The energy shock is also affecting U.S. domestic politics. Oil prices above $107 a barrel represent a historical first: the only time an incumbent administration has run an election campaign while facing such rapidly rising retail fuel prices.

Less than two months before the November midterm elections, public opinion polls show voters placing economic concerns, especially inflation and energy costs, above all other issues. A recent New York Times poll found that voters currently trust Democrats more than Republicans to manage the economy, increasing pressure on the administration to stabilize energy markets.

The White House has portrayed the oil-price spike as a deliberate effort by Tehran to influence U.S. politics. In comments to reporters, administration officials alleged that the Iranian government was keeping energy prices artificially high to weaken the ruling party’s political prospects.

Officials have asserted that oil prices will fall significantly after the election, but energy analysts warn that the physical disruptions to supply lines have no quick resolution. The duration of the market shock will ultimately depend on how quickly the East-West pipeline can be repaired and protected against continuing proxy threats.