Oil Breaches US$100 as Houthi Attacks Threaten Global Supply Routes

By Adrian Singh

Oil prices surged past US$100 a barrel on Thursday for the first time since May, after Yemen's Houthi rebels attacked two Saudi oil tankers in the Red Sea. The assault adds a new layer of risk to global energy markets already strained by the near-halt of trade through the Strait of Hormuz.

Brent crude futures closed up US$6.62, or 7%, at US$100.69 a barrel, the highest settlement since May 22. Since the Iran war began in February, the global benchmark has risen nearly 40%, with almost all gains coming this month. US West Texas Intermediate crude settled at US$92.19, up 6.2%.

“With the possibility of a ground war seemingly increasing by the day, and tanker traffic restricted through two of the most active chokepoints in the world, crude oil is suddenly positioning itself to within striking distance of the four-year high of US$126.41,” said Bob Yawger, director of energy futures at Mizuho. “The global economy is drawing down so fast it will eventually be running on fumes.”

Houthis Open a New Front in the Iran War

The Houthi militia, allied with Iran, said it attacked two Saudi oil tankers in the Bab el-Mandeb Strait as part of a naval blockade on shipments from Saudi Arabia. Saudi state news agency SPA confirmed one vessel was ablaze after an assault in the Red Sea but did not name the attacker.

Analysts at Gelber and Associates noted that “the escalation compounds the near-halt in Hormuz traffic and the sharp reduction in Iranian exports, intensifying concerns over near-term global availability.” The Strait of Hormuz and Bab el-Mandeb together carry roughly a quarter of the world's oil supply, according to estimates.

Despite the attacks, shipping data showed two Chinese supertankers carrying a combined 4 million barrels of Saudi oil successfully exited the Red Sea via Bab el-Mandeb on Thursday.

Goldman Sachs Warns of US$120 Oil by Year-End

Goldman Sachs projected that Brent could exceed US$120 a barrel in the fourth quarter and average US$100 next year if the strait remains disrupted through 2027. Further upside is possible if the Bab el-Mandeb Strait and Suez Canal also suffer persistent disruption.

Iran's Revolutionary Guards claimed an oil tanker caught fire after an explosion while following a mined route near the coast of Oman, and said two others turned back. The Guards declared the strait “completely closed” while US actions continue, warning that no tanker would enter or leave without coordination with Iran. US President Donald Trump has promised “major military punishment” for Iran and its Houthi allies.

Supply Disruptions Mount as Tanker Traffic Plunges

Iranian strikes on vessels crossing the Strait of Hormuz have slashed non-Iranian oil tanker traffic. The reintroduction of a US naval blockade targeting Iranian ports has likely cut Iranian oil loadings to zero, from 1.5 million to 2 million barrels per day at the start of the month, according to UBS analyst Giovanni Staunovo. Loading activity within the Gulf has fallen to 2.5 million barrels per day over the past seven days, compared with 6 million bpd over the past 30 days.

To shore up supplies, seven core OPEC+ members — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — are expected to increase their output target by about 188,000 barrels per day for September when they meet on August 2, three sources told Reuters. The war, however, hinders some members from pumping more.

FAQ: What Do These Oil Price Moves Mean for Guyana?

Why should Guyanese care about oil prices above US$100?

As a rising oil producer, Guyana benefits directly from higher crude prices. Every dollar increase in the price of Brent boosts government revenues from the Stabroek Block, potentially funding infrastructure and social programs. But it also raises fuel import costs for consumers and businesses.

Could the Houthi attacks affect Guyana's oil exports?

Indirectly, yes. If global supply routes remain disrupted, tanker insurance costs rise and shipping schedules may shift. However, Guyana's oil is exported primarily to North America and Europe, not through the Red Sea or Strait of Hormuz, so direct disruption is limited.

What does OPEC+ output increase mean for Guyana?

An OPEC+ output boost could moderate prices if the war eases. For Guyana, which is not an OPEC member, higher global supply might reduce the urgency for new production, but the country's low-cost, high-quality crude remains competitive.

Bottom Line

The Houthi attacks have opened a dangerous new chapter in the Iran war, threatening two critical chokepoints that move a quarter of the world's oil. For Guyana, the immediate effect is a windfall for state coffers, but the long-term risks of sustained high prices and supply volatility cannot be ignored. As always, transparency and fiscal discipline will be key to managing this boom.

Photo: The Star