Saudi Arabia has been forced to shut its critical Petroline pipeline after drone strikes, raising fears of a fresh spike in oil prices. The closure follows a rapid advance by Iranian-backed Houthi rebels, who have seized Yemen's entire Red Sea coastline and three key islands, putting Saudi oil tankers within reach of shoreline missiles and drone boats near the vital Bab al-Mandab strait, a route the kingdom had relied on to bypass Iran's blockade of the Strait of Hormuz.

The Petroline had been carrying five to seven million barrels a day, roughly five per cent of global demand, before last week's drone attack, which was launched from inside Iraq by Iranian-backed militia, embarrassing Baghdad's government into sacking a military commander. Even if the pipeline reopens, Saudi exports to Asia may need to be rerouted via the Suez Canal and around the Cape of Good Hope, adding costs that could push crude prices, already above $100 a barrel, even higher as winter approaches. Yemen's government has launched a counter-offensive near Mocha, and while Saudi Crown Prince Mohammed bin Salman has urged President Trump to intervene militarily, Trump has declined, saying the situation would "work out just fine" and reaffirming his belief the Iran war will end soon.