Oil prices have risen sharply due to a new escalation in the Middle East
Oil prices rose by more than 1.5% during Asian trading, reaching their highest level in more than six weeks. The market reacted to attacks by Yemeni Houthis on oil tankers in the Red Sea and a new wave of U.S. strikes against Iran.
Brent crude futures rose by $2.20, or 2.3%, to $96.27, the highest level since June 8, after rising by more than $3 in the previous session to reach $94.07, just shy of a six-week high.
The price of U.S. West Texas Intermediate (WTI) crude rose by $1.65, or 1.9%, to $88.48, following a 3% gain on Wednesday.
In addition to the escalating conflict with Iran over control of a key waterway, the Houthis, who are linked to Tehran, have opened a new front, threatening to attack ships carrying Saudi oil in the Bab el-Mandeb Strait and declaring a naval blockade of Saudi Arabia.
Oil prices face a rare risk due to simultaneous disruptions in both the Bab el-Mandeb Strait and the Strait of Hormuz, said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
The Houthis stated that they carried out a military operation targeting two Saudi oil tankers, while maritime security reports indicate that one of the vessels identified by the group—the Saudi-flagged tanker Encelia—was struck in the Red Sea.
The Houthis said they forced about 10 ships to turn back after warning them of the danger of passing through to Saudi Arabian ports.
Reuters was unable to immediately confirm this information.
The Houthis’ naval blockade of Saudi Arabia in the Red Sea threatens to disrupt global energy supplies outside the Persian Gulf, while a spokesperson for Iran’s Islamic Revolutionary Guard Corps also warned shipping companies that the southern route through the Strait of Hormuz is mined.
The new threat to passage through the Red Sea could disrupt the supply of up to 5 million barrels of oil per day and the main route for oil from the Persian Gulf, which bypasses the Strait of Hormuz, said Sol Kavonik, head of energy research at MST Marquee.
The U.S. military said it had completed its 12th consecutive night of attacks on Iran just hours after President Donald Trump vowed to destroy Iranian bridges or a power plant every time Iran fires on a ship in the Strait of Hormuz, raising the stakes in the war with Iran.
This was reported by Reuters.
As a reminder, on Friday, July 17, global oil prices continued to hover near the $84-per-barrel mark. The market remains stable amid current economic factors and the situation on the global energy market.
Over the past few days, Iran has been secretly smuggling oil tankers through the Strait of Hormuz even before the United States reinstated the naval blockade of Iranian ports.
