Crude oil prices surged dramatically following a claim by Iran-backed Houthi militants that they attacked two Saudi Arabian tankers in the Red Sea. This action intensifies the conflict in the Middle East and threatens more profound supply disruptions. West Texas Intermediate crude rose nearly 2%, trading above $88 per barrel, while Brent crude prices climbed sharply to over $95 in after-hours trading.
The rebel group stated that it used missiles and drones to strike the vessels, identified as the Encelia and the Layla, for violating a blockade imposed in the Red Sea. Minutes before the Houthi statement, the United Kingdom Maritime Trade Operations office reported that a vessel southwest of Al Shuqaiq on Saudi Arabia's Red Sea coast was struck by a flying object, resulting in a fire on board. The UKMTO did not disclose the identity of the ship.
This first attack on a Red Sea tanker opens a new front in the Middle Eastern conflict. The violence has already paralyzed shipping in the Strait of Hormuz after a recent escalation. In recent days, Iran has repeatedly targeted vessels in this narrow waterway, which is crucial for Persian Gulf exports.
According to U.S. Central Command, American forces have conducted airstrikes against Iran for the 12th consecutive day to further degrade its ability to threaten commercial shipping in the Strait of Hormuz. Iran has responded by targeting Kuwait, which has borne the brunt of its retaliatory strikes.
Both the United States and Iran have downplayed prospects for talks, increasing the likelihood of prolonged hostilities that could lead to tighter supplies in the oil market.
Earlier this week, the Houthi militants threatened to block Saudi shipping in the Red Sea. This waterway has become a vital alternative export route that Saudi Arabia increasingly relies on to bypass the Strait of Hormuz. The escalation now threatens the daily flow of millions of barrels of crude to global customers.
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