Oil prices rose above $100 per barrel Thursday for the first time since early June as the war in Iran expanded into Saudi Arabia and the Red Sea. Yemeni Houthi forces attacked Saudi tankers avoiding the Strait of Hormuz, forcing shipments to take longer routes. This escalation coincided with the U.S. signing a nuclear power agreement with Saudi Arabia to develop a civilian nuclear program, aiming to counter Iran’s nuclear ambitions, according to fortune.com.
The Houthi attacks targeted Saudi vessels near the Bab el-Mandeb Strait off Yemen, compelling Saudi tankers to reroute north through the shallower Suez Canal and into the Mediterranean Sea. To reach Asian markets, tankers must now travel around Africa, increasing transit time, fuel consumption, and insurance costs. Jennifer Li, senior geopolitical analyst at Rystad Energy, said the nuclear deal between the U.S. and Saudi Arabia is seen as escalatory by Iran, which has positioned the Houthis to specifically target Saudi oil shipments, per fortune.com.
The conflict’s expansion into Saudi maritime routes disrupts global oil supply chains, contributing to rising prices. The diversion of Saudi oil shipments away from the Persian Gulf to avoid Iranian attacks adds logistical challenges and costs. The U.S.-Saudi nuclear agreement aims to prevent Iran from gaining a nuclear edge, but it has intensified regional tensions. This dynamic underscores the geopolitical risks affecting energy markets and global oil trade flows, as detailed by fortune.com.
Saudi Arabia’s tanker rerouting and the ongoing Houthi attacks have already increased shipping costs and transit times. The nuclear deal was signed on Wednesday, and oil prices crossed the $100 mark on Thursday, reflecting immediate market reactions, according to fortune.com.