Oil surges above $100 as Red Sea attacks stokes fears of wider Iran conflict

Oil prices have surged above $100 a barrel for the first time since May, following Houthi attacks on oil tankers in the Red Sea that have stoked fears of a wider regional conflict. Brent crude spiked more than 5% on Thursday, as the Middle East conflict teeters on the edge of an “unimaginable spread of conflict.” Until Wednesday, oil was hovering around $90 per barrel, but the strikes in the Red Sea have put energy markets on edge. West Texas Intermediate, the US benchmark, was up almost 5% to $90.98 per barrel.

The price surge comes after Yemen’s Houthi rebels announced a naval blockade on Saudi Arabia earlier this week, threatening the kingdom’s ability to bypass the Strait of Hormuz. The Houthis have targeted oil tankers in the Red Sea, disrupting shipping through the Bab el-Mandeb strait, a vital alternative route for Saudi oil exports. The attacks have raised concerns about global oil supply disruptions, with fears of a supply crunch intensifying as the conflict escalates.

In response to the attacks, President Donald Trump issued a stern warning on Truth Social, stating: “If they do this again, the U.S. will hold Iran responsible, in that the Houthis are a Surrogate and/or Proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves.” The warning underscores the growing tensions between the US and Iran, as the Houthis’ actions are seen as part of Tehran’s broader regional strategy.

Gas prices have also risen steadily over the past month, with average US gas prices surging to $4.09 per gallon. The spike in energy costs is expected to have a ripple effect on global economies, with inflationary pressures already mounting in many countries. The International Energy Agency has warned that the disruption to oil supplies could exacerbate the global energy crisis, particularly if the conflict in the Red Sea continues to escalate.

The Houthi attacks come amid a broader escalation of the US-Iran war, with Iran launching attacks on US allies in the Gulf region and the US conducting strikes on Iranian targets. The conflict has already disrupted shipping through the Strait of Hormuz, and the Red Sea attacks add a new dimension to the crisis, threatening a key alternative route for oil exports.

The international community has urged restraint, but the situation remains volatile, with both sides showing little willingness to de-escalate. As oil prices continue to climb, the economic impact of the conflict is being felt around the world, with consumers and businesses facing higher energy costs. The coming days will be critical in determining whether diplomatic efforts can prevent a wider conflict or whether the region will slide further into chaos, with devastating consequences for global energy markets and the world economy. The surge in oil prices serves as a stark reminder of the fragility of global energy supplies and the interconnected nature of modern economies. As the conflict continues, the world watches with concern, hoping for a de-escalation that would restore stability to energy markets and prevent further economic disruption.