Houthi attacks increase pressure on Saudi Arabia

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Saudi Arabia intercepts drone near Mecca

Highlights

Saudi Arabia says it intercepted a Houthi drone near Mecca.
The Houthis deny targeting the holy city.
Fighting has intensified across Saudi Arabia and Yemen.
Energy infrastructure and shipping routes face added risks.

The drone was destroyed Tuesday evening after Saudi authorities issued a security alert in Mecca, CNBC reported. Saudi officials described it as the second Houthi attempt to target the area after a ballistic missile incident in 2017, while Houthi officials rejected the Saudi account.

Fighting moves deeper into Saudi Arabia

The incident follows several days of intensified attacks against the kingdom. The Houthis said they targeted a military air base Monday with missiles and drones in retaliation for Saudi strikes in Yemen. Saudi-led coalition officials said 13 civilians were wounded.

The confrontation had been relatively contained after a U.N.-brokered truce in 2022 sharply reduced cross-border attacks. Fighting has intensified again this year, particularly after the Houthis expanded their position along Yemen's Red Sea coast and increased pressure on shipping around Bab el-Mandeb, one of the world's most important maritime trade corridors.

The escalation is also testing regional security arrangements involving Saudi Arabia, Turkey, and Pakistan as Riyadh seeks to contain threats to its territory and export infrastructure.

Energy routes face mounting pressure

The security deterioration comes as Saudi Arabia deals with a separate disruption to its oil network. Riyadh blamed an Iran-aligned militia based in Iraq for Friday's attack on the East-West Pipeline, which carries crude from Gulf production areas toward the Red Sea.

The pipeline has become especially important while shipping through the Strait of Hormuz remains constrained. Saudi Arabia has not announced a restart date, although U.S. Energy Secretary Chris Wright said Tuesday that crude flows could resume within days.

Traffic through Hormuz has nevertheless been recovering. The seven-day average of oil transit reached nearly 12 million barrels per day by Sunday, though that remained below 60% of pre-war volumes.

Oil market remains exposed to regional escalation

The latest attacks matter for oil markets because risks are now concentrated around several routes at once. Saudi Arabia is dealing with an offline pipeline connecting its eastern oil fields with the Red Sea, while instability near Bab el-Mandeb threatens another major maritime corridor and Hormuz traffic has yet to fully recover.

That combination leaves traders sensitive to further attacks even as some Gulf shipping improves. Any prolonged disruption to Saudi export infrastructure could reduce the flexibility available to compensate for constrained maritime flows, while a rapid pipeline restart would ease some of that pressure.

Oil prices moved lower Wednesday after their recent surge but remained near four-month highs. Brent crude futures fell 0.65% to $107.77 a barrel, while U.S. West Texas Intermediate futures declined 1.17% to $104.26, according to the latest market data provided.

Earlier, we reported that new attacks in Hormuz and Saudi Arabia deepen oil supply threat.

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