The Houthis Struck Two Saudi Ships In The Red Sea. Oil Is Jumping Further And Closing In On $100

Oil prices soared on Thursday after Iran’s Houthi allies struck two vessels carrying Saudi oil in the Red Sea as clashes in the Middle East continue to escalate.

Brent crude, the international benchmark, jumped 5.44% and clocked in at $99.14 per barrel at 8:38 a.m. ET, while West Texas Intermediate, the U.S. benchmark, soared 4.34% and stood at $90.60 per barrel at the same time.

The Houthis conducted the first such strikes in the key waterway, which the group is now seeking to control as the war in Iran continues to escalate.

Tehran has also vowed to manage traffic through the Strait of Hormuz and has been targeting vessels seeking to make it through without coordinating with its forces.

Reuters detailed on Wednesday that seven vessels heading to Asia had already reversed course since the announcement earlier this week. The group, which operates in Yemen, said on Monday that the decision is based on the “equation of ‘an eye for an eye'” and will “respond to all escalation with all escalation, thus solidifying this equation.”

It went on to threaten Riyadh further, saying it is ready “for all options, and any foolish act committed by the reckless Saudi enemy through all escalation will be met with a comprehensive and decisive escalation by Allah’s will and power.”

CNBC noted that Saudi Arabia has been diverting millions of barrels of oil per day from the Strait of Hormuz to the Red Sea as a result of the war. The Houthis preventing Riyadh from doing so further exacerbates the disruption taking place in oil markets. Prices continue to soar, with brent crude topping $94 a barrel on Wednesday.

Traffic has plummeted further in the Strait of Hormuz. Citing data from Lloyd’s List Intelligence, the outlet detailed that only 53 vessels crossed the key waterway in the week through July 20, a 66% drop compared to the previous week.

Data from Kpler also shows that traffic dropped right after hostilities began again, with Iran striking vessels not going through the route approved by Tehran. Daily crossings had averaged more than 20 before July 15 but have dropped to the single digits last week.

Tensions continue to escalate in the meantime. Secretary of State Marco Rubio said that the price Iran will pay “will get higher every night” until Tehran is ready to make a meaningful peace agreement.

“Iran is begging (for a deal) every day. The problem with Iran is every time they make a deal … they either break it or they want to change it,” Rubio said. “So now they’re paying the price for it. And maybe they’ll ​change their mind here over the next few days as they continue to suffer great losses.”