Houthi Attack Blocks Saudi Oil Route, Sending Brent Crude Prices Soaring

Saudi Arabia's oil exports are facing another major disruption after Iran-backed Houthi militants struck two Saudi oil tankers in the Red Sea, blocking a key route for the country's oil shipments. The attack has escalated tensions and pushed Brent crude prices above $100 per barrel for the first time since late May.

The Houthis targeted the Encelia and Layla tankers, which were carrying Saudi crude bound for India and China respectively. The blockade of the Bab el-Mandeb Strait, a major oil chokepoint, has eliminated a key safety valve that Saudi Arabia had created after Iran disrupted the Strait of Hormuz earlier in the year.

The market is now pricing a worrying probability of supply interruptions in a second chokepoint, according to research strategist Ahmad Assiri at Pepperstone. Brent settled at $100.69 per barrel on Thursday, up roughly 7% on the day, while West Texas Intermediate closed at $92.19, a gain of about 6%.

The sudden repricing reflects a convergence of geopolitical shock, persistent domestic inflation already running 1.7 percentage points above target, and direct warnings from Fed policymakers that their patience is not unlimited.