Daily · Middle East Energy Crisis · September 12, 2026

Key points

Saudi Pipeline Shutdown

Saudi Arabia temporarily shut down its East-West oil pipeline, a vital route for crude exports to the Red Sea, following drone attacks launched from Iraq. The Saudi Ministry of Foreign Affairs stated that several drones originating from Iraq targeted the pipeline in the Riyadh and Medina areas, resulting in injuries and material damage. An official from the Saudi Energy Ministry told state news agency SPA that the pipeline was shut as a precaution. The 1,200-kilometer Trans-Arabian pipeline has a capacity of up to 7 million barrels per day and carries oil from fields in the Eastern Province to the port of Yanbu on the Red Sea coast, allowing Saudi Arabia to bypass the Strait of Hormuz.

Iraqi Prime Minister Ali al-Zaidi ordered an investigation into those responsible and the operations commander in Maysan governorate was removed from his post following confirmation that the drone attack was launched from that region. The Iraqi government condemned the attacks and welcomed Saudi Arabia's decision to hold off on retaliation, stating it had ordered an investigation into those responsible. Saudi Arabia said it would not retaliate at this stage, following a request from the Iraqi Prime Minister to allow Baghdad to take measures to prevent further attacks from Iraqi territory.

The Gulf Cooperation Council Secretary-General Jasem Mohamed Albudaiwi called the attack 'a dangerous escalation and an unacceptable threat to the security of the Kingdom of Saudi Arabia, its territorial integrity, and its vital installations.' Crude oil prices rose to over US$100 a barrel for the first time since July. Brent futures were trading at around US$105 a barrel after the ministry's statement; Brent had surged to nearly US$110 on Thursday due to speculation about the latest violence.

The disruption to Saudi Arabia's East-West pipeline adds to existing Houthi threats to Gulf energy infrastructure and shipping, with direct implications for oil supply and pricing in the region. The mechanism linking this event to markets is the removal of a key workaround for Gulf oil exports, raising freight costs and delivery times. This is happening now because the Houthis have seized control of the Bab el-Mandeb Strait, squeezing both sides of the Arabian Peninsula. A historical precedent is the 2019 Abqaiq attack, which also disrupted Saudi exports via the East-West pipeline. What to watch next is whether Iraqi authorities can prevent further attacks from their territory and how long the precautionary shutdown will last.

Houthi Red Sea Seizure

Yemen's Houthis seized the port city of Mocha and Perim Island, completing their takeover of the Bab el-Mandeb shipping lane. The group claims it has control of the Bab al-Mandab Strait, the gateway to the Red Sea and the Suez Canal, though it says maritime navigation is 'safe for all companies except for Saudi vessels.' The UN has warned that the conflict has created the world's worst humanitarian crisis, with millions of people at risk of starvation.

US President Donald Trump said he had no regrets about launching a war on Iran, despite the fact that it has killed hundreds of thousands of people and displaced millions more. Trump declined Saudi crown prince's call for US strikes on Houthis. The Houthis seized control of Mayun Island (Perim), a 13 sq km volcanic island in the Bab al-Mandeb Strait, confirmed by a senior military official of Yemen's internationally recognised government and a Houthi official.

The advance by Iran-backed rebels gives Tehran effective control of two of the Middle East's most important waterways. The combined closure of the Strait of Hormuz and Houthi control of the Bab al-Mandab Strait squeezes both sides of the Arabian Peninsula and pressures global oil shipping routes. This is happening now because the Houthis have launched a ground offensive in southwestern Yemen while simultaneously delivering drone and missile strikes on coastal areas in the Red Sea and the outskirts of Taiz. A historical precedent is the 2015 Houthi advance into Sanaa, which also shifted the balance of power in Yemen. What to watch next is whether the Houthis can hold their territorial gains and how international shipping will respond to the new maritime embargo.

Iran War Stalemate

The US and Israel's war with Iran, launched in February, remains a costly stalemate as a US blockade has virtually halted Iran's oil exports while Gulf exports have recovered. Brent crude surged above USD 100 this week. The IEA expects global oil supply in 2026 to fall by 5.7 million barrels per day, or around 6%, because of the Middle East conflict and related disruptions. The IEA estimates that oil inventories fell by 3.1 million barrels per day in August.

Iran's oil exports dropped from 1.85 million barrels a day last spring to around 255,000 in August, according to figures compiled by Homayoun Falakshahi, an oil expert at Kpler. Exports of non-Iranian oil rose from 300,000 barrels a day at the height of the war to 8.4 million in September, and exports through alternative routes took that number to 10.8 million; non-Iranian exports were at around 14 million barrels a day before the war. US Energy Secretary Chris Wright said on Sunday: 'we're probably two-thirds or more of preconflict flows.'

The simultaneous squeeze on both Hormuz and Bab el-Mandeb removes the main workaround for Gulf oil exports, raising freight costs, delivery times, and refined-product prices for European and Gulf-based buyers. This is happening now because the US has reimposed its naval blockade of Iran in July, and the Houthis have seized control of the Bab el-Mandeb Strait. A historical precedent is the 1973 oil embargo, which also disrupted global oil supply. What to watch next is whether diplomatic progress can be made to end the war and restore normal shipping routes.

BRICS Summit New Delhi

The 11-nation BRICS summit took place in New Delhi, India, with leaders of China, Russia, and Iran among those attending. President Xi Jinping arrived in New Delhi on Saturday for the BRICS summit, his first visit to India in nearly seven years. Xi was scheduled to hold a bilateral meeting with PM Modi on the sidelines of the summit on Saturday.

Xi Jinping proposed an initiative on 'AI-empowered new industrialisation' to strengthen cooperation on industrial and supply chains among BRICS nations. Xi invited all BRICS countries to join the World Artificial Intelligence Cooperation Organisation, a Chinese-led initiative for global AI governance. Xi expressed China's readiness to collaborate with other nations to produce more R&D and application outcomes under the AI industrialisation initiative.

The summit brings together the world's largest emerging-market bloc at a moment of acute geopolitical stress, with decisions on payments infrastructure, trade policy and collective stances on the Iran conflict directly affecting market access and regulatory environments for firms operating in BRICS markets. This is happening now because the US and Israel are at war with Iran, while Washington continues to pressure Moscow over Ukraine and disrupt trade relationships. A historical precedent is the 2015 BRICS summit in Ufa, which also focused on reforming global governance. What to watch next is whether the BRICS bloc can achieve consensus on a joint declaration regarding the Iran conflict.

Ukraine Winter Warning

UN official Alexander De Croo warned Ukraine faces its toughest winter since Russia's 2022 full-scale invasion, citing systematic Russian targeting of energy infrastructure. De Croo said there is a risk of humanitarian catastrophe if Russian attacks cut off access to power and water, and described a race against the clock to repair the power network before winter.

Five people were killed and 67 others were wounded in a daytime Russian drone strike on a shopping mall in Pavlohrad, Dnipropetrovsk region, on Thursday. Two other shopping malls were targeted by Russian air strikes earlier in the week, killing two people and injuring 28 in Zaporizhzhia and Sumy. Russia has started using faster, jet-powered drones that are harder to intercept in recent around-the-clock attacks on Ukraine, particularly Kyiv.

A direct Russian red-line statement on European troop deployment raises the risk premium on European defence and energy markets and complicates any post-war security arrangement. This is happening now because Russia is targeting Ukraine's energy infrastructure in preparation for winter. A historical precedent is the 2022 Russian strikes on Ukraine's power grid, which also caused widespread blackouts. What to watch next is whether Ukraine can repair its power network before winter and whether European countries will deploy troops to Ukraine.

Our read

The simultaneous disruption of Saudi Arabia's East-West pipeline and Houthi control of the Bab el-Mandeb Strait removes the main workaround for Gulf oil exports, raising freight costs and delivery times. The US and Israel's war with Iran remains a costly stalemate as a US blockade has virtually halted Iran's oil exports while Gulf exports have recovered. The BRICS summit in New Delhi brings together the world's largest emerging-market bloc at a moment of acute geopolitical stress, with decisions on payments infrastructure and trade policy directly affecting market access. UN official Alexander De Croo warned Ukraine faces its toughest winter since Russia's 2022 full-scale invasion, citing systematic Russian targeting of energy infrastructure. Decision-makers should verify counterparties, review exposure and limits, update policies, and watch for filings related to these developments.

This analysis was produced automatically by a large-language-model system from the public sources listed below. It is AI-generated content: it reflects the sources and the model's processing, not an editorial opinion, and may contain inaccuracies. It is not investment, financial or legal advice and contains no call to action; base decisions on the original sources and on advice from qualified professionals.

Sources