Renewed tensions between the United States of America and Iran alongside the situation surrounding the Bab El-Mandeb Strait have propelled oil values past 100 dollars. Fears of global supply disruptions are reigniting anxieties, while the impact is already felt in numerous countries through escalating fuel prices.
For the first time since last July, dark gold prices crossed the 100-dollar threshold starting Wednesday, approaching the 110-dollar mark on Thursday. Oil rates stayed elevated on Friday despite a minor retreat, with investors remaining uneasy over the advance of Yemen’s Houthis, who aim to obstruct Saudi crude exports through the Red Sea.
On Friday morning, Brent crude dipped by 1.03% to 106.49 dollars. WTI fell by 0.74% to 101.68 dollars before recording a slight decline by day’s end.
The prevailing situation at the Bab El-Mandeb Strait—a strategic and vital passage for global commerce and energy delivery—triggered this petroleum price surge across the market. This choke point gained added significance following the outbreak of Middle East hostilities aimed at Iran, accompanied by navigation limits within the Strait of Hormuz.
On Thursday, Yemeni Houthis seized control of the Red Sea city of Mokha, marking a notable breakthrough in their advance toward the strategic Bab El-Mandeb Strait, a key transit zone connecting Europe and Asia. Saudi Arabia’s hydrocarbon shipments face direct impacts from this development, coming right as the kingdom reported its oil production dropped last month to its lowest level since 1990. This situation risks further complicating matters for Saudi Arabia, whose energy exports find themselves held hostage between the two straits. On Friday, Riyadh announced the temporary shutdown of the East-West pipeline, used to bypass Iran’s blockade of Hormuz following recent strikes targeting the line.
Analysts predict major economic, geopolitical, and energy repercussions globally. According to the chief investment officer at Cite Gestion, “the real shock is currently unfolding across the tanker freight market,” as shipping costs jumped with the Middle Eastern conflict. “The issue is no longer merely oil availability, but the availability of vessels capable of transporting it,” given that ships spend more time at sea due to required detours, he cautioned.
Consequences are also emerging through climbing fuel prices across several nations. Specialists note that this fuel hike stems not from a shortage of crude oil, but rather from a deficit of refined fuels, primarily diesel and jet fuel. However, prospects of discussions between Iran and its Gulf neighbors regarding the Strait of Hormuz are slightly cooling market tension following recent surges.
At the weekly closing session, North Sea crude for November delivery declined by 2.81% to 104.61 dollars, despite gaining 8.65% over the week. Its American counterpart, West Texas Intermediate for October delivery, dropped 2.37% to 100.05 dollars.
Tehran will hold discussions on Monday to “promote better understanding among regional nations and help strengthen shared regional security,” assured Iran’s Foreign Ministry, confirming that “Iraq and other Gulf-coastal states” will participate.
Markets also found modest reassurance in projections of declining consumption issued by the International Energy Agency (IEA), which forecasts global oil demand to drop by 2.5 million barrels per day—940,000 barrels per day less than predicted last month.
Nevertheless, the market remains under strain. According to numerous analysts, crude could reach 120 to 150 dollars if hostilities persist, bearing major consequences for the global economy.