Drone strikes on Saudi pipeline push crude to $109.80

By Fiona Sterling · 2026-09-15

Three blows in 48 hours

Brent crude for November 2026 delivery touched $109.80 a barrel on 14 September before settling at $106.48, the sharpest single-weekend move in the oil price since the early months of the Ukraine war.^[1] Three market-moving supply threats landed within 48 hours.

On 10 September, drone strikes hit infrastructure along Saudi Arabia's East, West Pipeline and Riyadh shut the line as a precaution.^[2] The pipeline runs 1,200 kilometres from Saudi Arabia's eastern oil fields to the Red Sea port of Yanbu and carries up to 7 million barrels per day, making it the kingdom's principal route around the Strait of Hormuz.^[3] Saudi Aramco said the line proved a critical supply artery, helping mitigate a global energy shock and relieve customers affected by Strait of Hormuz shipping constraints, after reaching its maximum capacity of 7.0 million barrels per day earlier this year.^[3] With the pipeline now shut, officials say repairs could take weeks, leaving no bypass.

The Red Sea chokepoint narrows

The next day, Houthi forces seized Mayun Island, also known as Perim Island, at the Bab el-Mandeb Strait's mouth.^[4] The strait handles around 4 million barrels of crude and refined products daily, and a closure forces tankers roughly 7,000 nautical miles farther around the Cape of Good Hope, substantially raising freight costs for every barrel eventually reaching Australian shores.

Iran's Revolutionary Guard Corps then said it had destroyed a US unmanned surface vessel in the Strait of Hormuz, that the Strait of Hormuz is blocked and under their intelligent control and intelligence dominance, and that any hostile presence in this strategic strait will be targeted.^[5] Simultaneous threats to Hormuz and the Bab el-Mandeb gave traders little reason to sell.

What this costs at the bowser

US on-highway diesel averaged $5.967 per gallon in the week ending 7 September, before the pipeline shutdown reached the wholesale market.^[6] Australian pump prices track Brent crude closely: every $1 rise in the oil price adds roughly 3.5 cents per litre at the bowser. The rise from pre-weekend levels to the $109.80 intraday peak exceeded $10 a barrel, suggesting a potential pass-through of around 35 cents per litre if sustained.

Tanker detours around the Cape of Good Hope add a second layer of cost. Higher freight rates lift Australian wholesale fuel prices independently of the crude benchmark, so the pump impact could exceed the Brent move alone.

The East, West Pipeline is expected to remain shut for several weeks. Saudi Aramco's next repair-timeline update is the clearest near-term market signal, alongside any Houthi escalation at Mayun from occupation to active interdiction of tanker traffic through the Bab el-Mandeb.

Fiona Sterling

Fiona Sterling writes about superannuation, tax and personal finance. She takes rules that are written to be confusing and explains what they mean for the money in your account.