Oil prices punched through $95 a barrel on Wednesday for the first time in six weeks, and the reason is geography. Brent crude jumped more than 4 percent to $95.10, its highest level since June 11, while West Texas Intermediate climbed to $88.10, TradingEconomics price data show. Behind the move: the world’s two most important oil chokepoints came under simultaneous pressure, according to reporting from The National and ship-tracking firm Kpler.
The Strait of Hormuz has been effectively closed to normal traffic since February, when Iran began attacking tankers after the war with the United States erupted. Now Yemen’s Houthis have declared a maritime embargo against Saudi Arabia and deployed missiles and drones along the Bab el-Mandeb strait at the southern end of the Red Sea, the kingdom’s last good exit for crude, as Forbes reported. Hopes for de-escalation dimmed further as the US struck Iran for an eleventh consecutive night and President Donald Trump warned that America will bomb Iranian bridges and power plants if Tehran fires on ships in Hormuz.
Why Oil Prices Are Rising Now
Just last week, the market was pricing in peace. Crude eased toward $82 a barrel on reports that mediators had floated a 10-day truce between Washington and Tehran. That trade unwound in about 48 hours.
Yemen, not Iran, killed that trade. On Monday, the Houthis announced a maritime embargo against Saudi Arabia, citing a Saudi strike on Sanaa airport and what the group calls a decade-long blockade of Yemen. By Tuesday, ships were turning around. Four tankers carrying 3.8 million barrels of Saudi crude, gasoil, and naphtha reversed course before reaching Bab el-Mandeb, and Kpler recorded a 34 percent single-day drop in traffic through the strait.
“The Houthis are signalling that they are prepared to expand the confrontation from Yemen’s territory into the Red Sea maritime domain,” said Neil Quilliam, an associate fellow with the Middle East and North Africa programme at Chatham House.
Saudi Arabia’s Escape Route Is Closing
That threat lands on an oil market that has already lost its main artery. Since Iran’s blockade shut Hormuz to most traffic, Saudi Arabia has rerouted more than 70 percent of its crude exports to Yanbu, its terminal on the west coast, pushing cargoes out through the Red Sea instead of the Gulf.
That workaround is now failing. Kpler’s tanker-tracking numbers show the slide across every leg of the Saudi export chain in just two weeks:
- Crude loadings through Bab el-Mandeb fell 36 percent, to 6.1 million barrels per day in the week of July 13 from a peak of 9.5 million on June 29
- West coast loadings slid to 2.79 million barrels per day from 4.23 million
- Asia-bound flows dropped to 3.32 million barrels per day from 5.30 million
“We are seeing a bit of a drop in Bab Al Mandeb. It’s more than 1.2 million barrels a day now, from the Middle East and Asia side toward the Red Sea,” said Homayoun Falakshahi, head of Kpler’s crude analysis team.
Noam Raydan, a senior fellow at the Washington Institute for Near East Policy, put the problem plainly: “Right now we are facing two pressures on two critical choke points for energy security.”
How Much Oil Is Actually at Risk?
The arithmetic gets alarming quickly. Hormuz normally carries about a fifth of global oil flows. Traffic through the strait was already down to 30 to 50 percent of pre-war levels. The latest flare-up could cut that to as little as 5 to 15 percent.
Bab el-Mandeb carries roughly 12 percent of global trade and a quarter of the world’s container traffic. Oil flows through the strait averaged 9.3 million barrels per day in 2023, fell to 4.1 million in 2024 during the Houthis’ first tanker campaign, and had recovered to about 7.4 million barrels per day by June as Saudi Arabia leaned on its Red Sea terminals, US Energy Information Administration and Kpler data show.
A full closure of both straits would put a quarter of the world’s oil and gas supply at risk. Andreas Krieg, an associate professor at King’s College London, warned that shutting both would place Saudi Arabia under “strategic siege.”
“The wider economic effect would be global,” Krieg wrote. “Disruption at Hormuz would constrain Gulf energy exports, while disruption at Bab Al Mandeb would damage Asia-Europe trade and remove ships from circulation through longer voyages around Africa.”
The Houthi Playbook, Version Two
Markets have seen this movie before, which is why they are repricing so fast. The Houthis’ 2023 to 2025 tanker campaign attacked more than 100 vessels, killed at least nine mariners, sank four ships, and seized two, including the Galaxy Leader, held for over a year. Suez Canal transits fell by more than half, costing Egypt about $6 billion in canal revenue in 2024. More than 2,000 ships diverted around the Cape of Good Hope, adding up to three weeks per voyage. Maersk and Hapag-Lloyd, which control 15 percent and 7 percent of global container capacity, suspended Red Sea transits within days of each other.
Some damage never healed. “They’ve established a new navigation order,” Raydan said, noting that vessels still broadcast Chinese or Russian cargo details on their tracking systems as a signal to the group.
Quilliam argues enforcement barely matters. “Even limited attacks on shipping can alter commercial behaviour and force vessels to take alternative routes,” he said.
What Could Push Oil Prices Past $100?
Crude has been over $100 once already this year. Prices crossed that line in March during a rally of roughly 50 percent, one of the steepest monthly moves on record, before diplomatic progress dragged Brent back below $80 in June, a round trip we tracked in our report on Brent’s fall below $80.
Getting back there would not take much. If Houthi attacks force Saudi Arabia to cut loadings from Yanbu, the last flexible supply in the region goes offline, and traders would need to price barrels that simply cannot reach buyers. The National reported that threats to Saudi exports could push crude past $100 a barrel.
“If the Houthis succeed in disrupting shipping through Bab Al Mandeb or around Saudi Red Sea ports, they would place Riyadh’s alternative export route at risk,” Quilliam said. “In effect, they would threaten both of the Gulf’s main oil export corridors.” The stakes for Riyadh are severe enough that he expects restraint: “If they begin targeting Saudi-linked vessels, oil infrastructure or ports, Saudi Arabia would face pressure to respond militarily, either directly or through Yemeni government forces.”
The War Premium Is Now Structural
Beneath the daily swings, the oil market has stopped treating the Iran war as a temporary disruption. The conflict has entered its sixth month, the US campaign has run for eleven consecutive nights, and Washington is debating a supplemental budget whose Pentagon share alone runs to $67 billion, as we detail in our report on the war’s $37.5 billion price tag.
Rerouted trade, longer voyages, higher insurance, and permanently altered shipping behavior have shifted the supply curve rather than dented it. Our analysis of the permanent shift in Hormuz oil exports traces how exporters have adapted, and central banks are already weighing the inflationary fallout, as covered in our report on recession risk from the Iran oil shock. For consumers, the question is no longer whether the war premium fades this month. It is how much of it never fades at all.
