Threats to shipping through two major Middle Eastern waterways deepened concerns about disruptions to global energy supplies.
Oil prices rose to their highest levels in more than a month on July 23 after Yemen’s Iran-aligned Houthis claimed attacks on two Saudi oil tankers in the Red Sea, opening a second front in a conflict that has already disrupted shipping through the Strait of Hormuz and now seems poised to spread more widely.
Brent crude futures rose $4.89, or 5.16 percent, to $100.36 a barrel by 10:13 a.m. ET, while U.S. West Texas Intermediate crude climbed $4.84, or 5.6 percent, to $91.40—in both cases the highest levels since early June.
Both benchmarks rose for a fifth consecutive session as traders weighed the risk of simultaneous disruptions at the Strait of Hormuz and the Bab el-Mandeb Strait, two critical routes for global oil and fuel shipments.
“The immediate outlook for crude oil remains supportive as markets price a worrying probability of supply interruptions in a second chokepoint,” Pepperstone research strategist Ahmad Assiri said.
The Houthis’ recent announcement of a maritime blockade of Saudi Arabia has made shipping companies nervous, analysts at ING wrote in a recent note. They said that tankers wanting to avoid the risk of attack in the Bab el-Mandeb Strait may instead opt to enter and exit the Red Sea via the Suez Canal, an alternative route that would add significant time and expense to voyages to Asia.
Supply risks have also increased outside the Middle East after renewed attacks disrupted operations at the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, a major export route for crude from Kazakhstan.
“Factoring in the renewed disruptions from the Persian Gulf, risks to Saudi crude exports from the Red Sea, and developments in the Black Sea, one may argue that Brent at just over $91 [per barrel] is undervalued,” ING analysts wrote. “Particularly if these disruptions persist into August.”
Tankers Attacked in Red Sea
Houthi spokesman Brig. Gen. Yahya Saree said in a July 23 post on X that the Houthis had used several ballistic and cruise missiles as well as drones to strike two Saudi oil tankers—the Encelia and the Layla—as part of a naval blockade imposed against Saudi Arabia.
The group claimed in a statement posted by Saree that both vessels caught fire and that about 10 other ships were forced to turn back. Those assertions could not be independently verified.
The UK Maritime Trade Operations said a tanker caught fire off Saudi Arabia’s Red Sea coast after being struck by an unknown projectile, leaving its crew fighting the blaze. The incident was reported around the same time as the Houthi announcement.
By Tom Ozimek
