Oil closed in on $100 a barrel in London 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.
Brent briefly spiked above $98 a barrel, after closing at a six-week high in the previous session. The Houthis said they fired missiles and drones at the vessels for violating a blockade of Saudi ports that they announced this week.
The attacks open a new front in a regional conflict that has snarled traffic through the Strait of Hormuz following a flare-up in hostilities between the US and Iran. Saudi exports from the Red Sea have been a major workaround since flows from the Persian Gulf fell to a trickle. The renewed turmoil has already pushed up crude prices by more than 30% this month.
The Red Sea attack is “a serious escalation” of the conflict, said Daniel Hynes, senior commodities strategist at ANZ Group Holdings Ltd. “If this route is disrupted, the tightness in the oil market is only going to worsen.”
In recent days, 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. Tehran has responded by attacking US allies in the region. Some analysts see prices returning to triple digits later this year if hostilities persist in the Middle East.
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