Overview

Oil prices rose on Tuesday as emerging threats to Red Sea shipping from Iran‑backed Houthis in Yemen compounded supply concerns amid ongoing U.S.–Iran strikes.

Price Movements

Brent crude futures for September advanced 2.5% to settle at $91.41 a barrel, while U.S. West Texas Intermediate September contracts also gained 2.5% to close at $84.54 a barrel.

Geopolitical Context

The United States completed a tenth consecutive day of strikes against Iran, to which Iran responded by attacking a tanker in the Strait of Hormuz and targeting U.S. military bases in the region. U.S. Secretary of War Pete Hegseth told reporters that Iran had been given every opportunity to negotiate and that the United States would hit Iranian sites “ten times harder” and continue degrading them nightly. President Donald Trump said Iran “desperately” wanted to meet but the United States had no interest until a meaningful meeting, adding that any site where Iran pursued a nuclear weapon would be hit “very, very powerfully.” Mediators continue to push for diplomacy and to revive the interim peace deal signed in mid‑June. Pakistani Prime Minister Shehbaz Sharif and Iranian Interior Minister Eskandar Momeni met in Islamabad, and U.S. Secretary of State Marco Rubio indicated that the United States could still be open to resuscitating negotiations.

Shipping Impact

The fighting has made vessels in and around the Strait of Hormuz cautious, curtailing transit and stoking supply concerns. Houthis announced plans to impose a blockade on Saudi ships, raising fears for the Bab al‑Mandeb Strait, which handles roughly 12 % of global trade and a significant share of oil shipments. Media reports indicated that at least two Saudi tankers diverted their routes following Houthi warnings. Kpler warned that such diversions could signal broader changes in tanker trade flows; if Saudi crude exports from Yanbu to Asia avoid the Bab al‑Mandeb, cargoes would likely be rerouted via the Suez Canal and the Cape of Good Hope, substantially increasing voyage distances and almost tripling tonne‑mile demand. Suez draft restrictions would favour Suezmax tankers, while Very Large Crude Carriers would need to sail partially loaded. Longer voyages would tighten tanker availability, support freight markets and raise delivered costs for Asian refiners, potentially reshaping global crude trade flows. President Trump noted that a Red Sea blockade had not yet occurred, but warned that if it did, the United States would “take care of it.”

Contributors

The article was contributed by Ayushman Ojha and Scott Kanowsky.