Oil prices hit their highest levels since May topping $100 per barrel on Thursday as heightened tensions in the Middle East continue to squeeze exports.
The Brent front-month crude oil futures contract ended trading in London on Thursday at $100.68 per barrel, up 7% or $7.04. In New York, the West Texas Intermediate was up 6.37% or $5.53 to $92.36 at 21:30pm EDT.
Oil prices fell temporarily last month in the wake of the U.S.-Iran ceasefire to hostilities that began on February 28. However, price spikes returned earlier this month after Washington responded to Iranian attacks on shipping in the key maritime artery of the Strait of Hormuz.
Meanwhile, earlier this week Yemen’s Iran-backed Houthi rebels began disrupting shipping in the Bab El-Mandeb Strait that links the Red Sea to the Gulf of Aden. The route was being used by Saudi Arabia to export oil via the Suez Canal to Europe and down south to Asian markets as an alternative to the Strait of Hormuz.
Disruptions either side of the Arabian peninsula (see map below) are now creating the market perception of severely stunted export levels from the Middle East going into the second half of the trading year. That’s after dire volumes in the first half.
According to Wood Mackenzie’s vessel tracking and cargo data, the region’s crude oil exports fell 82% from January to June. That’s an average of 18.8 million barrels per day across 370 cargoes down to approximately 3.4 million bpd across 71 cargoes.
The Strait of Hormuz carried approximately 11.4 million bpd of crude capacity in January and February 2026, averaging 6.3 large crude carrier movements per day according to Wood Mackenzie.
But traffic through the strait effectively ceased after February 28, although by early July, large crude carrier movements had partially recovered, it added, before the latest disruption.
Saudi Arabia’s response was to shift its oil exports through its East-West pipeline to Yanbu – the country’s Red Sea terminal. Now that has been thrown into doubt too following Houthi attacks.
Added Complication Of Red Sea Disruption
Earlier on Thursday, two Saudi oil tankers in the Red Sea were targeted by the Houthis claiming they had “violated” a blockade of Saudi ports, as the U.S. carried out a 12th consecutive night of military strikes on Iran, while the latter targeted U.S. air bases in Kuwait and Bahrain.
Houthi military spokesman Yahya Sarea said the group attacked the Saudi-flagged Encelia and Layla tankers with missiles and drones, according to the BBC.
Sarea added the Houthis would “continue their naval operations against the Saudi enemy” and “persist in enforcing the ‘siege for a siege’ equation.”
The reaction came after the Saudis targeted Houthi controlled Sanaa airport to prevent an Iranian aircraft from landing on July 13, allegedly carrying arms shipments, Reuters reported.
And the geopolitical risk premium in the oil futures market is unlikely to ease any time soon after U.S. president Donald Trump told Axios he is considering a “massive attack” on Iran that will be “bigger than ever before.”
He added that Israel would join “in two minutes if I ask them to” but that “we don’t need anybody” to launch the operation. The president has since also warned the Houthis of “major military punishment” after Red Sea attacks and said he would hold Iran responsible if such attacks escalated.
Overall, oil prices trended 16% to 18% higher on Thursday compared to last week and nearly 30% to 35% higher compared to last month.
Disclaimer: The above commentary is meant to stimulate discussion based on the author’s opinion and analysis offered in a personal capacity. It is not solicitation, recommendation or investment advice to trade oil and gas stocks, futures, options or products. Oil and gas markets can be highly volatile and opinions in the sector may change instantaneously and without notice.