Oil hits US$100 after Houthi attack on Saudi tankers worsens oil supply disruption
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Experts say oil prices are facing a rare risk from simultaneous disruptions at both the Bab el-Mandeb and the Strait of Hormuz.
PHOTO: REUTERS
- Oil prices reached nearly US$100 a barrel after Yemen’s Houthis attacked two Saudi oil tankers, increasing disruptions in the Red Sea and Strait of Hormuz shipping routes.
- Iran’s Revolutionary Guards declared control over the Strait of Hormuz, closing it to tankers without their coordination amid ongoing US military strikes.
- Goldman Sachs predicts Brent crude could exceed US$120 by Q4 and average US$100 in 2027 if Middle East supply disruptions persist, supported by declining global inventories and demand factors.
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Oil prices hit their highest in nearly two months on July 23, rising for a fifth day after Yemen’s Houthis said they struck two Saudi oil tankers, widening disruption to global oil shipping through both the Red Sea and the Strait of Hormuz.
Brent crude futures were up by US$5.83, or 6.2 per cent, at US$99.90 a barrel by 1.10pm GMT (9.10pm Singapore time) after reaching US$100 a barrel for the first time since late May.
US West Texas Intermediate crude rose US$4.41, or 5.08 per cent, to US$91.24, exceeding US$90 a barrel for the first time since June 11.
“The immediate outlook for crude oil remains supportive as markets price a worrying probability of supply interruptions in a second chokepoint,” said Pepperstone research strategist Ahmad Assiri.
Besides the renewed conflict over control of the Strait of Hormuz, Yemen’s Houthis have opened a new front by targeting vessels carrying Saudi oil in the Bab el-Mandeb strait after stating they would impose a naval blockade on shipments from Saudi Arabia.
Houthi militia attacked two Saudi Arabian oil tankers in a military operation, the group said on July 23, with a Saudi news agency later confirming one of the two vessels was ablaze after an assault while sailing in the Red Sea.
Goldman Sachs said Brent might exceed US$120 a barrel in the fourth quarter and average US$100 in 2027 if the Strait of Hormuz remains disrupted through 2027, with further upside if the Bab el-Mandeb strait and Suez Canal also suffer persistent disruption.
Iran’s Revolutionary Guards said an oil tanker caught fire after an explosion while attempting to follow a route they described as mined, in the southern area of the Strait of Hormuz near the coast of Oman, while two others had turned back.
In a statement, the Guards said the strait was under their control and “completely closed” while US actions continued in the region, warning that no tanker would be allowed to enter or leave without coordination with Iran.
The US military said it had completed a 12th consecutive night of attacks on Iran, hours after US President Donald Trump vowed to destroy an Iranian bridge or power plant every time Iran shoots at a ship in the Strait of Hormuz.
Goldman expects oil prices to retain most of their recent gains through July and August as global inventories continue to decline, supported by lower Middle East production, seasonal summer travel demand and a sharp slowdown in releases of strategic petroleum reserves.
Meanwhile, European diesel margins hit a record US$66.25 a barrel on July 17, supported by Russia’s diesel export ban following repeated Ukrainian attacks on its refineries and concerns over further disruptions to Middle East supplies, and traded as high as US$65.30 a barrel on July 23. REUTERS
