Red Sea shutdown risk looms as US-Iran tensions threaten to send oil prices even higher
Tehran puts Houthi militants on notice to close critical shipping lanes, threatening a fresh supply shock as Brent crude notches 21 per cent rally since early July
As tit-for-tat strikes persist following the collapse of a month-long interim truce between the US and Iran, the Red Sea – a critical chokepoint for oil shipments – could be sealed off if tensions escalate, potentially sparking a fresh surge in crude prices, according to analysts.
In June, commodity tracking firm Kpler recorded roughly 7.4 million barrels of crude and refined petroleum passing daily through the Bab el-Mandeb Strait. The key waterway serves as the gateway to the Red Sea and handles around 7 per cent of the world’s total oil supply.
“A military strike targeting the passage would send crude surging in the short term for sure,” said Zhao Xuyi, an analyst at Guotai Haitong Futures. “We regard such an attack as a credible risk, given its potential to stoke US consumer inflation and create political headwinds for the Trump administration.”
The global oil benchmark Brent traded near US$85 per barrel on Friday, notching a 21 per cent rally since early July.
Kpler’s vessel-tracking data showed that just seven ships transited the Straits of Hormuz on Wednesday, down from 13 vessels a day earlier. Of the seven transits, four vessels sailed inward into the Persian Gulf while the remaining three exited carrying liquefied petroleum gas, coal and fuel oil.