Oil prices shot up over the past week and the retail price of diesel in the United States surged past a record $6 a gallon as the United States and Iran both fired on tankers and the Iran-aligned Houthis in Yemen advanced along the Red Sea, potentially extending disruptions to another major oil route.
Washington now faces a dilemma over whether to help the Saudis fight the Houthis, risking further expansion of the war.
Four Yemeni government sources told Reuters that the Houthis had seized the strategic island of Perim on Friday in the middle of the Bab el-Mandeb strait — the "Gate of Tears" at the mouth of the Red Sea.
There have been no talks between the United States and Iran to end the conflict since a June agreement that collapsed within weeks.
In a post on X on Saturday, Ebrahim Azizi, head of the Iranian parliament's national security committee, said: "As long as the American side does not accept all of Iran's conditions, dialogue and negotiation are of no use."
Iran's Foreign Ministry announced on Friday that Iran would be attending a meeting with Gulf Arab states in Oman on Monday, at which the future of the Strait of Hormuz would be discussed.
But a senior Iranian official, speaking to Reuters on condition of anonymity on Saturday, played down the chances of a breakthrough, saying the meeting, called at Oman's initiative, was intended to discuss issues including the strait but was not expected to yield a signed agreement.
An agreement on routes through the strait between Iran and Oman will be presented at the meeting on Monday, which will also be attended by Iraq, but the strait will not reopen unless seven conditions conveyed by Iran to the U.S. are met, a source told Tasnim news agency, without elaborating.
Iran wants its control of the Strait of Hormuz to be recognised, allowing it to collect fees from ships that use it, which Washington rejects. Oman, which controls the opposite bank of the strait, says it is negotiating with the agreement of other regional states.
Saudi pipeline shutdown follows drone attack
Saudi Arabia said it had temporarily closed its East-West pipeline as a precaution after a drone attack that both Baghdad and Riyadh said had originated in Iraq, where Iranian-backed militias operate.
Ongoing attacks in the widening Middle East war could send energy prices even higher after a week that saw the cost of Brent crude surge back above $100 a barrel.
The 1,200-km (745-mile) East-West pipeline running across the Arabian Peninsula has served as the main route out for global supplies of Middle East oil for the past six months while the Strait of Hormuz has been largely shut by war.
It has been moving 4 million to 5 million barrels per day, amounting to 4% to 5% of global supply, sparing Saudi Arabia the brunt of the disruption that has crippled other Gulf oil and gas exporters.
Trump blames Iran; Saudi Arabia seeks US help
There was no immediate claim of responsibility for the strikes on the pipeline. Satellite images showed black smoke rising from an area of the pipeline south of Medina. The attack resulted in some injuries and damage that was being assessed, the Saudi Foreign Ministry said without detailing the impact on exports.
U.S. President Donald Trump, visiting Ireland to attend a golf tournament at one of his resorts, said Iran was probably to blame.
On Saturday, the Saudi Civil Defence said in a statement that a projectile fired by the Houthis had injured two people in Jazan region, and damaged several buildings, including a mosque.
Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, phoned Trump on Thursday and asked for U.S. military help fighting the Houthis, three sources told Reuters. They said the prince was told that Washington would not intervene directly for now but would help with intelligence.
Trump confirmed on Saturday that he had spoken to the crown prince, and said the Houthis had also phoned his administration and asked Washington not to become directly involved in the conflict.
Attack report adds to concerns over Strait of Hormuz shipping
Maritime trackers received new reports of an attack on a ship in the Strait of Hormuz on Sunday, adding to concerns about Iran-related threats to energy supplies after Saudi Arabia shut down a vital oil pipeline.
The British navy-affiliated agency UKMTO said it had a report of a projectile hitting a vessel as it moved through the Strait of Hormuz. The amount of damage and the status of the crew were unknown as of early Sunday, the agency said.
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