Iran's attacks on 10 oil tankers near the Bab-el-Mandeb Strait and the United States' retaliatory action against five Iranian tankers have escalated energy tensions in the region. These developments have increased crude oil prices to $109 per barrel and put pressure on the resilience of the global energy market.
Damage to Saudi Oil Infrastructure
In response to the attacks, Iran targeted U.S. military assets in Jordan and Kuwait. At the same time, the Houthis have begun their advance along the Red Sea coast and have taken control of the islands of Perim and Hanish. These advances could strengthen their control over the Bab-el-Mandeb Strait, which plays a vital role in the export of crude oil from Saudi Arabia and the United Arab Emirates.
Read more: The Expansion of Houthi Influence in the Red Sea is a Threat to Global Navigation
Last week, attacks on the East-West pipeline in Saudi Arabia caused significant damage to infrastructure. This pipeline is particularly regarded as an alternative artery for Saudi oil exports during wartime. Repairing the damaged pumping stations may take up to six weeks, increasing the risk of disruption in crude oil supply to global markets.
Decline in Oil and Gas Exports from Gulf Countries
Oil and gas exports from Gulf countries have decreased due to repeated damages from the war and shipping restrictions. Saudi Arabia has reported to OPEC that its crude oil production has fallen to levels not seen since the 1990s. Qatar has only managed to export 18 liquefied natural gas shipments in the first six months of the conflict, while it exported 509 shipments during the same period in 2025.
Saudi Arabia and Qatar have been forced to use time-consuming and costly ship-to-ship transfer methods to move oil and liquefied natural gas to meet customer demands. This situation has not only impacted the energy market but has also exacerbated the financial problems of the countries in the region.
Globally, the budget deficit caused by the war in Gulf Cooperation Council member countries has forced Saudi Arabia to seek foreign borrowing and has compelled Qatar to reduce its operational costs by 30 percent. These pressures have also affected bank interest rates, increasing borrowing costs for businesses and consumers.
Efforts to Negotiate with Iran
Economic pressures on regional actors may push them to take the initiative to negotiate with Iran. An agreement regarding the Strait of Hormuz, which Iran and the Gulf Cooperation Council countries intended to negotiate on September 14, could have been the first effort to establish new security arrangements in the region. However, these negotiations were postponed following the attack on the Yanbu pipeline.
Nevertheless, the ongoing escalation of tensions may lead regional countries towards reaching an agreement with Iran that will not necessarily encompass all of the United States' security and economic priorities. This war, which initially began as a preemptive strike against Iran, has now turned into a crisis management operation to stabilize global energy markets.
Read more: National Security Commission Spokesperson: Article 10 of the Strategic Action Plan Approved · Continued Export of Iranian Oil via the Persian Gulf
