Brent crude climbed to nearly $98 per barrel on Thursday, its highest level in weeks, after Yemen’s Houthi movement claimed responsibility for attacks on two Saudi oil tankers in the Red Sea. The incident has reignited fears that the Middle East conflict is expanding beyond the Strait of Hormuz, threatening another critical artery for global energy trade.
The attacks targeted two Saudi-flagged tankers, forcing markets to reassess geopolitical risks at a time when global oil supply chains are already under severe strain. According to reports, one vessel caught fire following missile and drone strikes, although there were no reported casualties. The attacks represent one of the most significant escalations involving Saudi shipping since the outbreak of the wider regional conflict.
Why Oil Prices Jumped
The immediate price reaction was driven less by actual supply losses and more by rising risk premiums.
Oil markets price not only current supply and demand but also the probability of future disruptions. Investors are increasingly concerned that attacks on Saudi tankers could expand into a sustained campaign targeting commercial shipping through the Red Sea and the Bab el-Mandeb Strait.
This concern comes on top of existing disruptions surrounding the Strait of Hormuz, creating the possibility that two of the world’s most important maritime energy corridors could face simultaneous security threats.
The Red Sea Has Become the New Flashpoint
For months, market attention has focused primarily on the Strait of Hormuz, through which roughly one-fifth of global oil consumption normally passes.
However, Saudi Arabia has increasingly relied on its East-West Pipeline to move crude from the Persian Gulf to Red Sea export terminals, allowing shipments to bypass Hormuz. If the Red Sea also becomes unsafe, Saudi Arabia’s alternative export route could come under pressure.
This dramatically changes the market’s perception of energy security.
Instead of one chokepoint, traders are now evaluating risks across two strategic maritime corridors simultaneously.
Markets Are Pricing Geopolitical Risk, Not Just Physical Supply
At this stage, there is no evidence that global oil production has fallen significantly because of Thursday’s attack.
Nevertheless, financial markets reacted quickly because geopolitical events affect expectations before they affect physical barrels.
Several factors are contributing to higher prices:
- Rising insurance premiums for tankers operating in the Red Sea.
- Higher freight rates as shipowners reassess voyage risks.
- Potential rerouting of vessels, increasing transport times and costs.
- Greater uncertainty over future Saudi export flows.
- Increased speculative buying by hedge funds seeking protection against further supply shocks.
These factors together create a sizeable geopolitical premium in crude oil prices.
Could Brent Reach $100 Again?
The move toward $98 has renewed speculation that Brent could soon return to the psychologically important $100-per-barrel level.
Whether that occurs depends largely on developments over the coming days.
Oil prices could continue climbing if:
- Additional Saudi or commercial vessels are attacked.
- Shipping companies suspend Red Sea transits.
- Military confrontation between Saudi Arabia and the Houthis intensifies.
- Iran becomes more directly involved in regional maritime tensions.
Conversely, prices could retreat if security conditions stabilise and shipping continues largely uninterrupted.
Global Economic Implications
Higher oil prices would extend well beyond energy markets.
Sustained crude prices above $95 (now it is: $89.536) would likely:
- Increase global inflationary pressures.
- Raise fuel and transportation costs.
- Increase operating costs for airlines, shipping companies and manufacturers.
- Complicate interest-rate decisions for major central banks.
- Slow economic growth in oil-importing economies.
For energy-exporting countries, however, higher prices could provide stronger fiscal revenues and improve government budgets.
Outlook
The attacks on Saudi oil tankers mark a potentially important shift in Middle East energy security. Investors are no longer focused solely on the Strait of Hormuz but are increasingly concerned that the Red Sea could emerge as a second major disruption point for global crude exports.
If attacks on commercial shipping continue, the geopolitical premium embedded in oil prices is likely to remain elevated, with Brent crude facing increasing momentum toward the $100 threshold.
The coming days will determine whether Thursday’s rally proves to be a temporary reaction or the beginning of a broader repricing of geopolitical risk across global energy markets.
