Oil extends gains following Houthi strikes on Saudi Arabia

Oil extended gains Tuesday, amid reports of fresh Houthi strikes on Saudi Arabia and attacks by Iran on ships in the Gulf.

Futures for international benchmark Brent crude for November delivery gained 1.25% to $107.00 a barrel. U.S. West Texas Intermediate futures for October advanced 1.27% at $102.68 per barrel.

Saudi Arabia closed its critical East-West pipeline that bypasses the Strait of Hormuz, after drones launched from Iraq damaged it, exacerbating oil supply disruptions at a time when the market is already tight.

Al Jazeera reported that the Saudi-led coalition in Yemen says 13 civilians were injured on Monday, after Houthi forces launched a wave of ballistic missile and drone attacks into Saudi Arabia.

Meanwhile, Iran’s military said it destroyed an advanced American drone over the Strait of Hormuz, following a series of operations by Tehran against U.S. unmanned naval systems in the Gulf. U.S. President Donald Trump said Sunday that the U.S. could continue its campaign against Iran and take control of its oil.

U.S. Central Command also disputed a claim by Iran’s Islamic Revolutionary Guard Corps that Panama-flagged oil tanker El Gaia struck a naval mine in the Strait of Hormuz.

“The Panama-flagged oil tanker El Gaia was struck by an Iranian missile last month and rendered inoperable,” CENTCOM said. “The IRGC’s false claim is yet another example of their lies and intimidation attempts while they try to impede commercial vessels in the strait.”

Inflation is going to pick up, given the oil pipelines are being attacked and the Saudi east west pipeline is closed, Komal Sri-Kumar, the president of Sri-Kumar Global Strategies, said on CNBC’s “Squawk Box Asia.”

“In addition to that, there is a tariff war which is quite accelerating, and that is going to put upward pressure on prices and therefore on bond yields,” Sri-Kumar added.