Oil prices jump to $116 as US-Iran war escalates
What's the story
Global oil prices have surged sharply as the Iran-backed Houthi movement from Yemen has entered the West Asia conflict. The development comes amid growing fears of further disruption to energy supplies and an expanding US military presence in the region. Brent crude, the international benchmark, rose nearly 3% to trade around $115.9 per barrel in early Asian hours after briefly hitting a high of $116.75.
Price surge
WTI above $103, rises over 3%
The US benchmark West Texas Intermediate (WTI) has also seen a jump of over 3%, trading above $103 per barrel. The price hike comes amid fears of a prolonged and widening war in the region. The latest increase in prices follows weekend missile launches by Houthi forces targeting Israel, with the group threatening to continue attacks until strikes on Iran and its allied militias cease.
Shipping disruption
Houthis risk disrupting Red Sea shipping
The Houthis's history of disrupting shipping routes has raised concerns in the global oil market. The group had previously forced vessels to avoid the Red Sea during earlier hostilities, and renewed threats could again choke a vital energy corridor. Mukesh Sahdev, CEO at XAnalysts, told Bloomberg that "the threat to Saudi oil infrastructure and exports through the Red Sea outlet is like denying bypass surgery that worked well to arrest the full heart attack of the Strait of Hormuz closure."
Export hub
Yanbu export hub under threat
Saudi Arabia's Red Sea export hub at Yanbu, which lies within range of Houthi missile capabilities, is also under threat. Any disruption here could further tighten supplies, especially as the Strait of Hormuz remains under strain due to the ongoing conflict. Market signals are already reflecting tight near-term supply with Brent's rapid spread widening significantly and front-month contracts trading at a premium of over $7 a barrel over subsequent deliveries.
Military escalation
Donald Trump suggests seizing Kharg oil
The US has deployed thousands of additional troops to the region, amid reports that the Pentagon is preparing for possible extended ground operations in Iran. However, senior officials have publicly downplayed the likelihood of such a move. In an interview with Financial Times, President Donald Trump added to market jitters by suggesting the US could "take the oil in Iran," including potentially seizing Kharg Island's key export hub—a move that could provoke sharp retaliation from Tehran.