Oil Tops $100 as Houthi Red Sea Attacks Open New Front in Middle East Conflict

Bloomberg reported that oil topped $100 a barrel for the first time in two months after Iran-backed Houthi militants said they attacked two Saudi Arabian tankers in the Red Sea, escalating the Middle East conflict and threatening deeper supply disruptions.

The Yemen-based Houthis said they fired missiles and drones at the vessels to enforce a blockade of Saudi ports announced this week. The attacks open a new front in the conflict, with the Iran war already snarling traffic through the Strait of Hormuz.

Targeting the Red Sea imperils the critical detour route that the Saudis used to keep oil barrels flowing amid the Hormuz disruptions. Exports from major producer Kazakhstan are also endangered by the Russia-Ukraine war, and global oil inventories are depleted by months of conflict.

Brent futures have surged more than 30% since the start of the month to trade near the highest since late May. Iran has struck vessels in Hormuz while the US has bombarded the Islamic Republic over the past 12 days and restored a blockade of its ports.

Rapidan Energy Group president Bob McNally, a former White House official, said round 2 of the military conflict is going to be broader than round 1, with risks to both shipping and energy infrastructure.

U.S. President Donald Trump threatened to hit Iranian bridges and power plants and reiterated threats to strike a suspected nuclear site. Washington and Tehran have both played down the prospect of peace talks.

Some vessels are already avoiding the Red Sea route, with Indian state firms and other Asian buyers contemplating a switch to longer, costlier routes via the Suez Canal. Kazakhstan is being forced to stop piping crude to its main export terminal on Russia's Black Sea coast following drone attacks on tankers.