Oil Hits $100 a Barrel as Houthis Open a Dangerous New Front in the Iran War

A Second Chokepoint Threatened

Oil prices surpassed $100 per barrel for the first time since May, with Brent crude rallying 6.45 percent to $101.10 a barrel on Thursday, July 23 — a milestone driven not just by the ongoing U.S.-Iran conflict, but by a dangerous new front opening in the Red Sea. The surge came after Tehran-backed Houthi rebels claimed attacks on two Saudi oil tankers in the Red Sea following their announcement of a naval blockade — the first time since the Iran war began that ship attacks had spread beyond the vicinity of the Strait of Hormuz.

Houthi rebels struck two Saudi oil tankers, the Encelia and the Layla, in the Red Sea, causing a fire aboard the Encelia while all crew remained safe. Houthi spokesman Yahya Saree confirmed the strikes, saying the group "targeted two Saudi oil tankers, named Encelia and Layla, for their violation of the blockade decision issued by the armed forces." The attacks were not random — they were a deliberate enforcement of a blockade declared days earlier, and markets immediately felt the shock.

Why the Bab al-Mandeb Strait Matters So Much

The Bab al-Mandeb chokepoint, connecting the Red Sea to the Gulf of Aden, is one of the world's most important shipping routes. Between Yemen to the northeast and Djibouti and Eritrea to the southwest, the strait is just 29 kilometers wide at its narrowest point. The Houthi threat is so unsettling to oil markets because millions of barrels per day pass through the strait to reach global markets — and about 12% to 15% of global maritime trade worth more than $1 trillion transits the waterway every year.

One thing that had helped limit the Iran war's disruption to global oil supply was Saudi Arabia's ability to use the Red Sea as an alternative export route to the Strait of Hormuz. The fragility of that workaround has now been laid bare by the new Houthi attacks. Five Saudi oil tankers reversed course in the Red Sea following the Houthi-declared maritime embargo targeting Saudi ports and shipping. Saudi Arabia can reroute oil northward through the Suez Canal, but that path adds 10 to 15 days of transit time to Asia and forces supertankers to reduce their cargo capacity. With the Strait of Hormuz effectively closed, shutting down Bab al-Mandeb as well could block 25 percent of the world's oil and gas supply.

Washington Responds — and Divides

Trump responded with escalating threats, posting on Truth Social that "major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves" should the Houthis continue attacking ships. The U.S. also completed its 12th consecutive night of military strikes on Iran, targeting missile storage, drone facilities, and coastal surveillance sites. But even as the White House signals harder action, Congress is fracturing over the direction of the war.

The House on July 23 formally called on President Trump to end the war in Iran. In a 214-208 vote, the House approved a war powers resolution that would direct the president to remove U.S. Armed Forces from hostilities against Iran. While not legally binding, the resolution represents a symbolic rebuke to President Trump over a war that lawmakers never voted to authorize. The Senate, however, voted 47-49 to kill a joint resolution that would have been binding — meaning Trump faces political pressure from his own party but no legal constraint on how far he can escalate.

What Comes Next for Energy Markets

Brent crude has rallied more than 30 percent in July alone, and Goldman Sachs sees it rallying to more than $120 a barrel by the fourth quarter of this year if supply disruptions continue. RBC Capital Markets' head of global commodity strategy, Helima Croft, warned that prices could potentially surpass the Russia-Ukraine oil price highs of $128 per barrel in 2022 — or even the 2008 peak of $146 — in a worst-case scenario of full regional war.

For everyday consumers, $100-a-barrel oil is not an abstraction. It feeds directly into gasoline prices, airline tickets, heating costs, and the price of nearly everything that gets shipped. Analysts also warn there is a risk the Houthis could escalate further by trying to attack Saudi oil refineries. With two of the world's most critical maritime chokepoints now under threat simultaneously, the pressure on global energy markets shows no sign of easing — and the decisions made in Washington and Tehran in the coming days could determine just how much worse things get.