Oil Jumps 3% as Houthi Attack on Saudi Forces Stirs Fears

Brent crude climbed 3.12% to $93.85 a barrel and WTI rose 3.47% to $87.27 after Houthi forces attacked Saudi-backed forces in Yemen, deepening supply disruption fears.

The attack extends a campaign that has already disrupted Gulf shipping, with the Houthis declaring a maritime embargo against Saudi Arabia on July 20 and claiming missile strikes on Saudi tankers off Yanbu, according to Reuters.

Both benchmarks touched their highest levels since June 11, compounding a surge driven by Iran's near-closure of the Strait of Hormuz and the U.S. naval blockade of Iranian ports. Shipping data from Kpler showed just three commodity vessels crossed the strait on a recent day, the fewest since May, as most ships halted or made U-turns after Iranian attacks on vessels.

The escalation threatens the flow of about a fifth of global oil and liquefied natural gas that transited the strait before the U.S.-Israeli war on Iran began in February. If the Houthi blockade of Saudi shipping widens, crude could extend gains into a second chokepoint, pushing energy prices higher and feeding inflation expectations across global markets.

Hormuz Traffic Collapses to Three Vessels a Day

The Strait of Hormuz, through which about a fifth of global oil and LNG flowed before the war began, has become a near-empty waterway. Kpler data showed just three commodity vessels crossed the strait on a recent day, the fewest since May, as most ships halted or made U-turns after Iranian attacks on vessels. The U.S. reimposed a naval blockade on Iranian ports, and Iran's Islamic Revolutionary Guard Corps threatened to close "all other export corridors that benefit the U.S. and its allies."

The last time traffic through the strait fell to such levels was in May, when a wave of Iranian attacks on vessels prompted most carriers to suspend Gulf sailings. That episode preceded a sharp spike in global energy prices and a scramble by importers to secure alternative supplies.

A Second Chokepoint Threatens Saudi Exports

The Houthi campaign adds a second chokepoint to the supply picture. The Iran-aligned group declared a maritime embargo against Saudi Arabia on July 20 and has since claimed missile attacks on Saudi oil tankers off the Red Sea port of Yanbu. Shipping data showed the number of commodity vessels passing through the Bab el-Mandeb strait fell to 18 on a recent Sunday, from 27 the prior day and 28 the day before that.

Saudi Arabia, the world's largest crude exporter, ships most of its oil through the Bab el-Mandeb and the Suez Canal. A sustained Houthi blockade would force Saudi tankers onto longer routes around the Cape of Good Hope, adding weeks to delivery times and tightening the global supply balance.

Traders are watching for any sign of de-escalation, with President Donald Trump having called off a planned bombing campaign over the weekend and said there were "good talks" under way with Iran, though he threatened to restart strikes unless negotiations deliver. A failure to reach a deal would keep the risk premium embedded in crude, lifting energy stocks and oil-exporting economies while feeding inflation expectations in importing nations.

This article is for informational purposes only and does not constitute investment advice.