Oil prices jump as Hormuz, Red Sea crises deepen
Renewed strikes on shipping in the Gulf and the Red Sea have dealt a fresh double blow to global oil markets. As prices climb once
Renewed strikes on shipping in the Gulf and the Red Sea have dealt a fresh double blow to global oil markets. As prices climb once again, DW examines what else could keep them elevated. Why are oil prices rising again? Around two weeks after the resumption of US and Iranian attacks in the Gulf region, the price of Brent crude reached $100 (€87.8) on July 23. This marked a nearly one-third increase from last month's low but is still below the $126 peak reached in April at the height of the conflict. The latest oil price surge was fueled by a major escalation in the Red Sea that could further set back efforts to export Gulf oil through alternative southern routes as the Strait of Hormuz remains effectively shut. The Iran-backed Houthi rebels based in Yemen entered the conflict on Wednesday (July 22), claiming responsibility for attacks on two Saudi oil tankers, and have threatened to further disrupt commercial traffic in the Red Sea. The Red Sea route had become a relief valve, allowing Saudi Arabia and the United Arab Emirates (UAE) to continue partial oil exports via pipelines to ports outside the Gulf. Overnight into Thursday, the United States carried out its 12th night of strikes on Iran, targeting missile and drone storage facilities and air defense systems that it says Tehran uses to strike ships and its Gulf neighbors.
Iran, meanwhile, shows no signs of backing down. What does the Red Sea escalation mean for oil markets? Energy analysts think the Red Sea blockade, if fully enacted, would be a double blow to the global energy sector after the Hormuz crisis. Bab el-Mandeb, a narrow strait at the southern end of the Red Sea, is seen as particularly vulnerable to a Houthi blockade. Around 2.5 million barrels of Saudi oil were moving through Bab el-Mandeb before the Houthi attacks, according to Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy. The Red Sea route allowed Saudi and the UAE to export around 6.8 million barrels of crude oil per day — about half of the usual volumes through the Strait of Hormuz. Iran war: Analyzing the Houthi blockade against Saudi Arabia To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Saudi Arabia has also utilized pipelines through Egypt to export oil via one of the North African nation's Mediterranean ports. Leon said the oil market is "increasingly dependent" on the Red Sea route and warned of a "significant rebound in oil prices" if both routes are inaccessible. On Tuesday, ahead of the Houthi strikes, Goldman Sachs warned that oil prices could spike to $120 per barrel by the fourth quarter if Hormuz remains closed.
The BriefWire