Oil Prices Soar Amid Escalating Middle East Shipping Risks and Rate Hike Expectations

Oil prices rose above $107 per barrel as the Middle East shipping risks escalate and markets price in a US rate hike. The Houthis' threat to attack Saudi ships if they use the Bab el-Mandeb Strait has traders reassessing supply routes and transport costs, forcing up oil prices.

The Strait is a crucial maritime gateway, with vessels still passing through it despite the heightened tensions. However, reports say that transporting oil via alternative routes is becoming more expensive due to the extended journey time and increased vessel chartering and fuel costs.

Tanker freight rates reached record levels last week, while a shortage of marine fuel emerged, further driving up transportation costs. Around 80% of global trade is carried by sea, so disruptions to key routes could have a broad economic impact.