K-Points

Oil Jumps as US-Iran Conflict Continues and Yemeni Houthis Enforce Saudi Arabia Blockade


Brent crude futures have surged past the $100-per-barrel mark for the first time in nearly two months, while the real price of oil has climbed to over $140 per barrel. This sharp increase comes as the ongoing US-Iran conflict intensifies and the Yemeni Houthi enforce a blockade on Saudi Arabian oil exports by attacking two tankers in the strategically vital Red Sea.

The Houthi group took responsibility for hitting two Saudi oil tankers in the Bab el-Mandeb Strait, following their recent declaration of a naval blockade targeting Saudi oil exports. This move has forced several vessels to alter their routes or delay transits through the strait, threatening a key export corridor that Saudi Arabia relies on to circumvent disruptions in the Strait of Hormuz. Saudi Arabia exports more that 5 million barrels of oil a day through the Bab el-Mandeb Strait.

 Iran has also closed the Strait of Hormuz in response to recent US military actions, further tightening the global oil supply. The simultaneous closure of both the Bab el-Mandeb and Hormuz straits—two of the world’s most crucial oil shipping lanes—have significantly heightened concerns over supply security.

The physical oil market also is tightening Since the US attack on Iran in 28th of February, governments around the world have released hundreds of millions of barrels from strategic reserves to stabilize markets. Commercial inventories have also plummeted sharply, while China has reduced its imports by drawing down stockpiles accumulated before the conflict began. The oil strategic reserves are now depleted or will be soon, leaving the market increasingly vulnerable to supply shocks.

Brent’s return to triple-digit pricing marks a reversal of earlier optimism. Many analysts had hoped that a US-Iran memorandum of understanding would pave the way for normalized Middle East oil exports. However, those hopes have quickly vanished as the US restart its attack on Iran and the conflict has now expanded beyond the Strait of Hormuz to the Red Sea, placing unprecedented simultaneous pressure on two of the globe’s most important oil transit routes.