Oil settles above $100 after Houthi attacks on Saudi tankers
Reporting based primarily on jpost.com.
Oil surges past $100 on Red Sea and Hormuz disruptions
Oil prices settled above $100 on Thursday for the first time since May after Yemen's Houthis said they attacked two Saudi oil tankers in the Red Sea, causing further global supply disruptions following a near-halt in trade through the Strait of Hormuz. [5] Brent futures finished up $6.62, or 7%, at $100.69 a barrel, marking their highest close since May 22. [5] The global crude oil benchmark's price is now nearly 40% higher than when the war in Iran began in February, with almost all of the gains coming this month. [5] US West Texas Intermediate crude closed up $5.36, or 6.2%, to settle at $92.19 a barrel, the highest close since June 4. [5] With the possibility of a ground war seemingly increasing by the day, and tanker traffic restricted through two of the most active chokepoints in the world, crude oil is suddenly positioning itself to within striking distance of the four-year high of $126.41, with the global economy drawing down so fast it will eventually be running on fumes, said Bob Yawger, director of energy futures at Mizuho. [5] Analysts estimate that the Strait of Hormuz and Bab el-Mandeb carry the equivalent of roughly a quarter of the world's oil supply. [5] Iranian strikes on vessels crossing the strait have resulted in a drop in non-Iranian oil tankers traversing the waterway, and the reintroduction of a US naval blockade targeting Iranian ports likely has resulted in Iranian oil loadings falling to zero from 1.5 million to 2 million barrels per day at the start of the month, Giovanni Staunovo, a UBS analyst, said. [5] As a result of fewer shipments exiting the strait, loading activity within the Gulf has fallen to 2.5 million bpd over the past seven days, compared with 6 million bpd over the past 30 days, Staunovo added. [5]
Houthi tanker attacks and Iranian blockade
Yemen's Houthis have opened a new front in the Iran war 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. [5] The Houthi militia attacked two Saudi Arabian oil tankers in a military operation, the group said on Thursday, with the Saudi Arabian state news agency, SPA, later confirming that one of the two vessels was ablaze after an assault while sailing in the Red Sea. [5] Iran's Revolutionary Guards said an oil tanker caught fire after an explosion while attempting to follow a mined route in the southern area of the strait near the coast of Oman and that two others had turned back. [5] 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. [5] Following the attacks, two Chinese supertankers carrying a combined 4 million barrels of Saudi Arabian oil managed to exit the Red Sea via the Bab el-Mandeb Strait on Thursday, shipping data showed. [5] US President Donald Trump promised "major military punishment" for Iran and its Houthi allies. [5] To shore up supplies, seven core OPEC+ members — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — are likely, when they meet on August 2, to increase their output target by about 188,000 barrels per day for September, three sources told Reuters, even as the war hinders some of the group's members from pumping more. [5]
Analyst warnings on further price rises
Goldman Sachs said Brent might exceed $120 a barrel in the fourth quarter and average $100 next year if the strait remains disrupted through 2027, with further upside if the Bab el-Mandeb Strait and Suez Canal also suffer persistent disruption. [5] The escalation compounds the near-halt in Hormuz traffic and the sharp reduction in Iranian exports, intensifying concerns over near-term global availability, Gelber and Associates wrote in a note. [5] With tanker traffic restricted through two of the most active chokepoints in the world, crude oil is suddenly positioning itself to within striking distance of the four-year high of $126.41, with the global economy drawing down so fast it will eventually be running on fumes, said Bob Yawger, director of energy futures at Mizuho. [5] Analysts estimate that the Strait of Hormuz and Bab el-Mandeb carry the equivalent of roughly a quarter of the world's oil supply. [5] Iranian strikes on vessels crossing the strait have resulted in a drop in non-Iranian oil tankers traversing the waterway, and the reintroduction of a US naval blockade targeting Iranian ports likely has resulted in Iranian oil loadings falling to zero from 1.5 million to 2 million barrels per day at the start of the month, Giovanni Staunovo, a UBS analyst, said. [5] As a result of fewer shipments exiting the strait, loading activity within the Gulf has fallen to 2.5 million bpd over the past seven days, compared with 6 million bpd over the past 30 days, Staunovo added. [5]
What to watch next: Goldman Sachs said Brent might exceed $120 a barrel in the fourth quarter and average $100 next year if the strait remains disrupted through 2027, with further upside if the Bab el-Mandeb Strait and Suez Canal also suffer persistent disruption. [5]
