Oil prices rise to highest since Jun 8 amid escalating US-Iran tensions, Houthi Red Sea blockade

OIL prices rose for a fifth day on Thursday (Jul 23) on increasing concerns about supply availability amid attacks on tankers in the Red Sea by Yemen’s Houthis and strikes between the US and Iran that have once again nearly shut the Strait of Hormuz.

Brent crude futures rose US$2.42, or 2.6 per cent, to US$96.49 by 0640 GMT, the highest since Jun 8. They had settled up more than US$3 at US$94.07 on Wednesday, just shy of a six-week high.

US West Texas Intermediate crude climbed US$1.59, or 1.8 per cent, to US$88.42, after Wednesday’s rise of 3 per cent.

Iran’s Revolutionary Guards said an oil tanker caught fire after an explosion while attempting to follow a route they described as mined, south of the Strait of Hormuz, 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.

Besides the renewed conflict over control of the key waterway, the Iran-aligned Houthis have opened a new front in the war by targeting vessels carrying Saudi oil in the Bab el-Mandeb strait and trying to impose a naval blockade of Saudi Arabia.

Oil prices are facing a rare risk from simultaneous disruptions at both the Bab el-Mandeb and the Strait of Hormuz, said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“Geopolitical premiums have returned, but a sustained (price) rally will require evidence of prolonged shipping disruptions or meaningful supply outages.”

The Houthis said they had carried out a military operation targeting two Saudi oil tankers, and maritime security reports said one of the vessels identified by the group, the Saudi-flagged tanker Encelia, had been hit in the Red Sea.

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The Houthis said they had forced around 10 ships to retreat and return after warning vessels against sailing to Saudi ports. Reuters could not immediately verify this account. The Houthis’ naval blockade on Saudi Arabia in the Red Sea threatens to disrupt global energy supplies beyond the Gulf, while Iran’s Revolutionary Guards’ spokesperson also warned shipping companies that the Strait of Hormuz southern route is mined in a post on X.

The new threat to Red Sea passage could interrupt up to 5 million barrels per day of oil supply, and the main route for Gulf oil that bypasses the Strait of Hormuz, said Saul Kavonic, the head of energy research at MST Marquee.

The US military said it completed its 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, raising the stakes in the war with Iran. REUTERS