Oil Surges Past $100 Amid Red Sea Attacks, Middle East Tensions
Global energy markets react to Houthi aggression and escalating US-Iran hostilities.
Carla Rooney
Brent crude prices surged over 5% on Thursday, breaching the $100 a barrel mark for the first time since May, driven by renewed fears over global energy supplies.
The benchmark UK gas price has surged to approximately 150 pence per therm, a stark increase from the 98 pence per therm recorded on June 26.
This dramatic climb reflects immediate market anxieties, even as the FTSE 100 index experienced a downturn, dropping 0.96% to 10,613.61 points during afternoon trading.
Despite the broader market decline, shares in major energy companies Shell and BP saw significant gains, rising around 1.4% and 2.6% respectively.
The escalating conflict in the Middle East has reignited profound fears over global energy supplies, specifically targeting critical shipping lanes.
Approximately 20% of the world's oil and liquefied natural gas typically transits through the Strait of Hormuz, making any regional instability a major concern for global markets.
The United States has stepped up military strikes against Iran, an aggressive move that further exacerbates already high tensions in the region.
A temporary ceasefire between the US and Iran failed, leading to fresh hostilities in the Gulf and directly contributing to the recent, sharp rise in oil prices.
The benchmark oil price has steadily climbed in recent weeks, a direct consequence of the breakdown of the US-Iran ceasefire deal and the subsequent return to conflict.
The Houthis claimed they attacked two Saudi Arabian oil tankers, the Encelia and Layla, accusing their crews of violating a naval blockade imposed by the group in the Red Sea.
The Houthis stated they targeted the tankers with ballistic and cruise missiles, as well as drones, reportedly leaving one vessel on fire.
US President Donald Trump accused Yemeni Houthis of shooting at two Saudi Arabian ships and threatened “major military punishment” on both them and Iran.
The Houthis had previously announced plans for a naval blockade on Saudi Arabia around the Bab al-Mandeb area in the Red Sea, a crucial choke point for global oil exports.
This threat could strangle Saudi oil exports through the Red Sea, intensifying concurrently with US-Iran tensions over oil flows through the Strait of Hormuz.
It’s a stark reminder of how quickly geopolitical tensions can feed into the energy markets.
Lucy Smith, a leading energy analyst, stated, “It’s a stark reminder of how quickly geopolitical tensions can feed into the energy markets.”
Smith added that while the immediate spike relates to the Houthi attack, an escalation in attacks on critical shipping routes or energy infrastructure would increase concerns about global flow reliability, keeping prices elevated indefinitely.
Energy bills shot up by 13% this month, a direct and painful impact on consumers already struggling with inflation.
Petrol prices have risen by 5p in two and a half weeks, reaching 155.57p, while diesel car drivers in the UK now pay an average of 170.8p per litre.
Simon Williams, a spokesperson for the RAC, stated that fuel prices are “shooting up like a rocket,” reversing cuts from recent months.
Simon Williams indicated that Unleaded prices are heading back towards 160p and diesel to a “shocking” 180p, warning that petrol could surpass its Iran war high of 159.53p if the conflict persists.
Williams added that unleaded prices are heading back towards 160p and diesel to a “shocking” 180p, warning that petrol could surpass its Iran war high of 159.53p if the conflict persists.
Unless the renewed conflict is brought to an abrupt end soon, UK drivers face stinging summertime pump prices, according to Williams.