Oil prices continued their upward trajectory after Iran-backed Houthi forces claimed responsibility for an attack on two Saudi Arabian oil tankers in the Red Sea, escalating Middle East tensions and raising the risk of further supply disruptions.
Brent crude futures rose as much as 2.2% to over $96 per barrel, having closed at a six-week high in the previous session, while West Texas Intermediate (WTI) futures hovered near $88. The Houthi group stated it launched missiles and drones at vessels violating a blockade, identifying the targeted tankers as the Encelia and the Layla.
Minutes before the Houthi statement, the United Kingdom Maritime Trade Operations reported a vessel was struck by ammunition southwest of Al Shuqaiq on Saudi Arabia's Red Sea coast, causing a fire on board. The organization did not disclose the specific name of the ship.
This latest attack marks the first targeting of oil tankers in the Red Sea, opening a new front in the regional conflict. Shipping through the Strait of Hormuz had already been disrupted as violence escalated, with Iran recently attacking several vessels in that narrow waterway, which is crucial for Persian Gulf crude exports.
Daniel Hynes, Senior Commodity Strategist at ANZ Group, described the Red Sea incident as a "serious escalation" of the conflict. "If this shipping route is disrupted, tensions in the oil market will only intensify further," he stated.
Brent crude has surged nearly 32% this month, with some analysts suggesting prices could return to triple digits later this year if hostilities in the Middle East persist. The U.S. military conducted its 12th consecutive day of airstrikes against Iran, while Tehran responded with attacks on Kuwait, bearing the brunt of Iran's retaliatory actions.
Priyanka Sachdeva, Senior Market Analyst at Phillip Nova Pte, noted that the sustainability of the price rally will depend on whether the Red Sea attacks are isolated incidents or trigger prolonged supply chain disruptions. She added, "Bulls can easily set a $100 per barrel target for Brent."
Bob McNally, Founder and President of Rapidan Energy Group, warned that oil prices could surge significantly if conflict around the Strait of Hormuz spreads to the Red Sea.
Brent crude for September delivery gained 1.7% to $95.66 per barrel. WTI for September delivery rose 1.4% to $88.01 per barrel, after climbing as much as 1.8% earlier.
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