Oil prices breach $100 as Houthi blockade and Hormuz closure tighten global supply
Analysts warn that Houthi enforcement is calibrated to vessel affiliation rather than cargo, while Russian diesel export bans and reduced Chinese imports compound the supply shock.
Brent crude futures surged past the $100-a-barrel threshold on Thursday, rising 6.96 per cent to $100.65, marking the first time the benchmark has exceeded this level since late May. The spike follows a coordinated escalation in maritime security risks, driven by the continued closure of the Strait of Hormuz and a newly declared naval blockade by Yemen’s Houthi rebels in the Red Sea. The dual disruption of these critical shipping lanes has triggered immediate volatility in global energy markets and raised concerns over supply stability.
The Houthi movement declared a blockade on shipments from Saudi Arabia on Monday, targeting vessels linked to Saudi Arabia, Israel, and the United States in the Bab el-Mandeb strait. On Thursday, the group claimed to have attacked two Saudi oil tankers, with a Saudi news agency confirming that one vessel was set ablaze. Marine analysis firm Windward noted it was unclear if the second tanker was struck, but the incident underscored the group’s intent to disrupt Saudi export routes.
According to Michelle Bockmann, a senior maritime intelligence analyst at Windward, Houthi enforcement appears calibrated to vessel affiliation rather than the type of cargo being transported. While Western and Saudi-linked operators have been warned to avoid the corridor, Chinese-owned tankers have reportedly been permitted passage. Two Chinese-owned vessels carrying Saudi-origin cargo passed through the Bab el-Mandeb on July 20 without interdiction, suggesting the blockade is shaping who moves crude rather than preventing its movement entirely.
The price surge is compounded by the ongoing closure of the Strait of Hormuz, which follows United States and Israeli military strikes on Iran. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, highlighted that crude buffers have not been replenished since the peak of the Hormuz crisis earlier this year. She described the simultaneous disruptions at both chokepoints as a new dynamic, illustrating how littoral states are leveraging their geographic position to influence global energy flows.
Domestic fuel costs in the United States are already reflecting these supply constraints, with the national average for petrol reaching $4.09 per gallon and diesel averaging $5.34 per gallon. Patrick De Haan, head of petroleum analysis at GasBuddy, warned that the current rise in oil prices could add between 10 and 20 cents to the average price per gallon in the coming weeks. De Haan noted that diesel prices are being impacted more significantly due to Russian export bans, which were implemented after Ukrainian drone attacks damaged domestic refineries.
Market uncertainty is further exacerbated by shifts in Chinese demand, which has historically stabilised global prices through consistent imports. However, China has slashed its oil imports in recent months, a move that De Haan described as unpredictable and a key factor in preventing even sharper price increases. With the upcoming US hurricane season approaching, analysts warn that refining capacity and global supply chains face additional wildcards that could further destabilise energy markets.
