Open source satellite imaging has shown the crucial 'Hormuz bypass' East-West oil pipeline that cuts straight across Saudi Arabia has been on fire. A some 80km to 100km giant smoke plume has been observed. The damaged section is said to be located near the town of Al Mesba'ah.

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Amid speculation that this is probably the result of a major Houthi attack out of Yemen, CNN in a new Friday report cites two US officials who've given confirmation that the pipeline was struck by projectiles on Thursday. Iraq was named as possible attack origin point. According to the report:

An early analysis found that pump stations, which are located next to the pipeline itself, were hit, one of the US officials said. A satellite image taken Friday appears to show extensive fire damage at one pumping station, and an image of a different pumping station, taken Thursday, showed a small fire sending up plumes of thick, black smoke.

It could have been the result of a drone attack by paramilitaries operating out of Iraq. "It was not immediately clear who was responsible for the strikes or if sections of the pipeline itself were damaged but one of the officials said it was struck by drones originating from Iraq," CNN reports. "It was also not immediately clear how long it would take to repair the damage, sources said."

News on Saudi oil has gone from worse to worse, as in Yemen the Houthis have reportedly taken over the entire Red Sea coastline. They have renewed the threats to attack all Saudi (as well as Israeli) shipping, but have also sought to assure transit is 'safe' for other international vessels.

Threats Rapidly Converge

Three converging threats to watch are intensifying pressure on global energy markets: damage to Russian refining capacity, ongoing disruption at Hormuz, and new, expanding Houthi threats to Red Sea shipping. The resulting physical market squeeze extends well beyond the Gulf area. Record-high diesel prices in the US and other markets, such as China's return to buying crude, raise the risk that oil markets will remain exceptionally tight into the Northern Hemisphere winter. 

What we know so far is that the Russia-Ukraine war has knocked out a whole bunch of refining capacity and halted exports of critical fuels from Russia. The Gulf area has seen an escalation in fighting this week as the Hormuz chokepoint remains open with tanker transits but still limited and far from pre-war levels. 

Couple this all with the chokepoint madness still being disrupted and new developments overnight: Iran-backed Houthi forces advanced toward a strategic port near the southern entrance to the Red Sea, threatening to tighten control on a second critical shipping corridor.