Houthi Attacks Deal 'Serious Hit' to Saudi Oil Exports, Warns Economist

A drone attack on Saudi Arabia's main oil pipeline has forced a weeks-long shutdown and pushed crude prices above $100 a barrel, an economist said, as Yemen's Houthi rebels captured more islands overlooking vital Red Sea shipping lanes.

The strike, which Riyadh blamed on Iran-backed militias in Iraq, hit the 1,200-kilometre East-West Pipeline on Thursday. The conduit carries Saudi crude from Gulf ports to the kingdom's western coast, allowing exports to bypass the Strait of Hormuz, where Iranian attacks have disrupted shipping.

Samina Sultan, a senior economist for European economic policy and trade at the German Economic Institute, said the immediate effect was a sharp rise in oil prices. "The oil price significantly increased to over 100 U.S. dollars per barrel," she said, adding that the duration of the closure depends on the extent of the damage, with reports so far offering a mixed picture.

Sultan described the Houthi advance as a serious blow to Saudi Arabia, which had relied on the Bab al-Mandab strait as an alternative route around the blocked Strait of Hormuz. "Now with the Houthi attacks this sort of leeway is coming under additional strain," she said.

The disruption extends beyond Saudi Arabia. The Red Sea is a key corridor linking Europe and Asia via the Suez Canal, and attacks on the waterway add pressure to trade relations between the two regions. Sultan predicted that shipping companies would divert vessels around the Horn of Africa, lengthening journeys and raising costs.

"The Houthi rebels, even though they seem small, they have a significant impact on the world economy," she said, warning of mounting strain on logistics and supply chains.