Gulf Oil Exports Face Fresh Threat as Houthi Attacks Cripple Saudi Pipeline

Saudi Arabia’s East-West Pipeline, a critical artery moving crude from the kingdom’s eastern fields to the Red Sea port of Yanbu, sits offline after drone strikes linked to escalating Houthi attacks. The closure is the sharpest economic signal yet of how deeply the U.S.-Iran conflict, now nearly seven months old since its February 28 start, is cutting into Gulf energy revenues and global supply chains.

The financial pressure is immediate. Michael Feller, chief strategist at Geopolitical Strategy, warned that “export-terminal stockpiles will run out unless the line is restored within days.” For Saudi Arabia and other Gulf exporters, every day the pipeline stays dark represents lost throughput, depleted inventories and mounting repair costs absorbed against a backdrop of sustained military disruption.

Oil markets offered a partial reprieve Thursday. Brent crude futures with November expiry fell 1.5% to $104.28 a barrel, while U.S. West Texas Intermediate futures with October expiry dipped 1.1% to $101.30, after reports that Saudi Arabia arranged alternative shipments through Oman’s Sohar port via ship-to-ship transfers. The relief is tentative. Rerouting cargo through Sohar adds logistical cost and transit time, and the underlying infrastructure damage remains unresolved.

By contrast, the strategic picture for energy corridors looks considerably worse. The Houthis, backed by Tehran, have seized control of the Bab el-Mandeb Strait, the chokepoint connecting the Red Sea to the Gulf of Aden and linking to global shipping lanes. That positioning compounds the pipeline closure, tightening the squeeze on one of the world’s most critical export routes and keeping risk premiums elevated across energy markets.

Against this backdrop, President Donald Trump plans to convene Gulf leaders on the sidelines of the United Nations General Assembly in New York next Tuesday. The State Department sent initial invitations Wednesday to all six Gulf Cooperation Council states: Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman. The guest list may expand to include other Arab and Muslim leaders, according to Axios, which first reported the gathering.

The meeting is framed as a postwar strategy session, though Washington’s ceasefire efforts have stalled as attacks on Gulf states intensify. Trump told reporters in North Carolina on Wednesday that a resolution could be near. “Well, hopefully we are toward the end of the war. They want to make a deal, we’ll see how that works out,” he said, adding that he had spoken directly with Iranian officials without elaborating on those conversations.

Any formal postwar framework is not expected to be finalized until after the U.S. midterm elections in November, Axios reported. What specific financial or security commitments Washington might require from Gulf states or Iran as conditions for settlement remains unclear, leaving investors and operators in the region with limited visibility on the timeline for infrastructure recovery.

Israeli Prime Minister Benjamin Netanyahu has expressed interest in meeting Trump during the New York gathering, though no meeting has been formally scheduled, according to an Israeli source cited by Axios.

The diplomatic calendar matters to energy markets because Iran’s willingness to engage shapes the repair horizon for Gulf infrastructure. Feller put the risk plainly: “Iran may be willing to do a deal after the midterms. If not, the war may continue until late 2028, if not beyond.” A conflict extending to 2028 would represent years of elevated operating costs, rerouting expenses and insurance premiums for shippers and exporters across the region.

U.N. Secretary-General António Guterres has called for de-escalation and restoration of freedom of navigation in the Strait of Hormuz, though his appeals have not yet produced a diplomatic breakthrough.

Restoring the East-West Pipeline is the most immediate lever for easing supply pressure and reducing the financial burden on Saudi Arabia. Whether Tuesday’s New York meeting produces any concrete commitment to that end, or simply maps the contours of a postwar order still months away, is the question Gulf energy investors will be watching most closely.