Houthi Attacks Fuel Oil Price Spike Fears

The escalating conflict in Yemen between Houthi rebels and Saudi Arabia has put oil prices at risk of significant increases, according to Middle East expert Allison Minor.

Minor, director of the Atlantic Council's Project for Middle East Integration, said that attacks on Saudi energy infrastructure, disrupted shipping routes, and Washington's reluctance to intervene are creating a continued upside risk for oil prices.

The Houthi movement has captured additional territory along Yemen's Red Sea coast and strategic islands near the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden and Arabian Sea. Saudi Arabia has become increasingly dependent on the Red Sea to export its oil, around four million barrels a day in July.

Minor said that the Houthis are 'seizing an opportunity' created by the regional conflict and that Iran is highly influential over the group, although it's not considered a full proxy. The Iran-backed movement has been exploiting Saudi Arabia's increased dependence on the Red Sea following disruptions to tanker traffic through the Strait of Hormuz.

The Trump administration's reluctance to intervene in the conflict is adding to uncertainty, with Minor stating that 'there's definitely growing frustration between MBS and Donald Trump.' This frustration stems from Washington's perceived security guarantee for Saudi Arabia being put into question, as well as concerns over domestic political considerations ahead of the midterm elections.