Oil prices extended their rally on Monday as rising tensions across the Middle East raised fresh concerns about crude supplies.

Brent crude futures gained $3.43, or 3.3%, to reach $108.04 a barrel by 2:24pm PKT.

US West Texas Intermediate (WTI) futures also climbed $3.49, or 3.5%, to $103.54 a barrel.

The latest gains followed a sharp rally last week. Oil prices rose about 9% as attacks across the Middle East increased.

Brent crude also moved above $100 a barrel for the first time since July. It reached around $110, its highest level since May.

Saudi Pipeline Shutdown Adds to Supply Concerns

A drone attack forced Saudi Arabia to temporarily shut its East-West pipeline, according to Saudi officials.

The pipeline allows Saudi Arabia to move oil without relying on the Strait of Hormuz. It can also redirect exports through the Bab el-Mandeb strait.

The shutdown could put up to 4% of global oil supply at risk.

With the pipeline offline, Yanbu’s available inventory could cover only five to seven days of exports, according to three industry sources.

Jemima Goldsmith Marries Cameron O’Reilly in Private Ceremony

The development has added pressure to an already tight oil market.

Attacks Raise Strait of Hormuz Risks

Tensions have also increased around the Strait of Hormuz.

A vessel came under projectile attack in the strait on Sunday, according to the British maritime security agency UKMTO. The incident caused a fire and forced the crew to evacuate.

Iran separately said one person died and four crew members suffered injuries after an Iranian commercial vessel came under attack off its coast.

Meanwhile, Yemen’s Iran-aligned Houthis reached the strategic island of Perim on Friday. Their move could strengthen their position near the Bab el-Mandeb shipping route.

Omani Foreign Minister Badr Albusaidi said a planned meeting between Gulf countries and Iran had also been postponed. The meeting was due to focus on the Strait of Hormuz.

Oil Rally Fuels Global Inflation Fears

The latest oil surge has also increased pressure on global financial markets.

Higher energy costs can push inflation higher. They can also encourage central banks to keep interest rates elevated.

As a result, global bond markets have faced renewed pressure. Bond yields have repeatedly reached multi-year highs.

US diesel prices also climbed above $6 a gallon for the first time. The rise prompted US President Donald Trump to call on Ukraine to stop attacks on Russian diesel infrastructure.

Oil market analyst John Evans of PVM warned that prices could climb further.

“Short of stopping both oil price affecting wars and curing the global refinery capacity problem,” Evans said, the market faces a difficult path to avoiding $120 Brent.

He also pointed to Russian refinery outages and falling stockpiles as additional risks.