Oil touches over one-week low as pause in attacks brings hope of US/Iran deal
XLE•Shipping and supply risks remain elevated
The conflict has disrupted shipping beyond the Strait of Hormuz, with traffic through the Bab el-Mandeb strait also affected. Prices surged last week on fears the attacks could lead to the closure of the Bab el-Mandeb route, the second-most important oil shipping chokepoint after the Strait of Hormuz.
However, the number of vessels passing through Bab el-Mandeb rose to 28 on Monday, a four-day high, while traffic through the Strait of Hormuz remained low, according to Kpler shipping data.
Analysts warned the risks to supply disruptions spreading to the Red Sea remain elevated after Saudi Arabia said it shot down drones aimed at petroleum targets, including in Riyadh. It said Iran-backed armed groups had launched the weapons from Iraq, and it reserved the right to respond.
Separately, Iran's Houthi allies in Yemen said they had targeted the East-West Pipeline carrying oil to Saudi Arabia's main Red Sea port of Yanbu in retaliation for Saudi drone incursions.
