Saudi Arabia shut its East-West pipeline to the Red Sea port of Yanbu on Friday after drone attacks by Iran-backed Houthi militias on southern oil facilities, pushing oil prices above $100. The pipeline serves as the main relief valve for global supply given Iran's control of the Strait of Hormuz, while Houthi control of the Bab al-Mandeb Strait further threatens Red Sea shipping.

Container shipping has adapted to Red Sea blockages by rerouting around Africa, limiting broader trade disruption. However, US diesel costs hit an all-time high, prompting President Donald Trump to consider using the Defense Production Act to boost supply. Fertilizer markets remain stable, with the World Bank's index near pre-attack levels, and the FAO food price index remains well below 2022 peaks despite elevated grain costs from Russia-Ukraine hostilities. Good wheat harvests in Canada, Morocco, Russia, and Ukraine support supply.

The wider threat to global trade remains contained, but the oil supply shock is significant. As Alan Beattie notes, refining capacity matters as much as global prices, and the US net energy exporter status does not shield it from such shocks.