Energy markets reacted on Wednesday, July 23, with a sharp spike in prices against the backdrop of escalating geopolitical tensions in the Middle East. Investors are alarmed by the potential escalation of the conflict between the US and Iran, as well as real threats to shipping in key global straits.
Sharp rise in quotes
Brent crude futures rose by more than 2%, surpassing the psychologically important mark of $96 per barrel. This is the highest level of "black gold" in the last six weeks. WTI crude also showed steady growth, adding almost 2% to reach $88.5 per barrel. Notably, during the previous trading session, this asset had already risen by 3%, indicating growing panic in the market.
Double threat to shipping
The main driver of the rise was concerns about simultaneous supply disruptions through two strategically important choke points — the Strait of Hormuz and the Bab el-Mandeb Strait. The situation is exacerbated by the actions of Yemeni Houthis, who announced an operation against two Saudi Arabian oil tankers. In addition, the group forced about 10 ships to abandon entry into Saudi ports.
The naval blockade of Saudi Arabia by the Houthis in the Red Sea poses a direct threat to global energy supplies outside the Persian Gulf. At the same time, the Islamic Revolutionary Guard Corps (IRGC) warned shipping companies that the southern route through the Strait of Hormuz is mined, making passage for ships extremely risky.
Escalation of the US-Iran conflict
Despite the existence of a signed ceasefire memorandum, hostilities between the US and Iran have not ceased. American troops are daily attacking bases and military infrastructure of the Iranian army. In response, the Houthi group supported by Iran has declared its readiness for further escalation of the conflict.
US President Donald Trump made a tough statement the day before, promising that US military forces would adequately respond to Iranian attacks in the Strait of Hormuz. Washington openly threatens to strike Iran's energy and transport infrastructure.
Position of allies
While the conflict is scaling up, US allies in the Middle East are expressing irritation over the intensification of military action against Iran. In the region, it is believed that Donald Trump should act more decisively and "go all in" to finally solve the problem, rather than limiting himself to targeted responses.
