Oil Market Divided by Strait Risks Amid Escalating Conflict
The global oil market has split into two distinct segments due to strategic chokepoints created by conflicts in the Middle East.
A sharp price divide has emerged between barrels whose movement is constrained by these chokepoints and crude that can be transported freely, resulting in unexpected winners and losers across the global trade.
The disparity intensified amid escalating tensions in the region, with Yemen's Iran-aligned Houthis nearing full control over the Bab el-Mandeb Strait. Saudi Arabia also halted operations on an oil pipeline to the Red Sea after a reported attack from Iraqi territory.
Fears of supply disruptions have driven up Brent crude futures, reaching a three-month high of $109.97 a barrel on September 11. This represents a 57% increase from their lowest point in July at $70.14 per barrel.