Oil Prices Spike After Houthis Target Ships in Red Sea

Summary

Bloomberg's Julian Lee reports that Houthi attacks on Saudi oil tankers in the Red Sea mark a major escalation, threatening the 4 million barrels/day of Saudi crude that had been redirected via the Red Sea after Hormuz's near-closure. Combined with Black Sea pipeline disruptions and dwindling stockpiles, oil prices are surging, with Brent breaking $100 and bank forecasts pointing to $120. The attacks also raise longer-term questions about the vulnerability of key maritime chokepoints.

• Houthis attack two Saudi oil tankers in southern Red Sea, first such strike in months.
• Saudi Arabia had rerouted ~4 mb/d of crude exports from Persian Gulf to Red Sea after Hormuz disruption.
• CPC pipeline in Black Sea halted after attacks on tankers, removing ~1.5 mb/d of mostly Kazakh crude.
• Global oil stockpiles significantly drawn down, leaving less buffer against further disruptions.
• Brent crude breaks above $100; major banks forecast prices potentially reaching $120.
• Julian Lee warns that willingness of shipowners and crews to take risks is the true test of route viability.
• Broader theme: narrow waterways like Hormuz and Bab el Mandeb are highly vulnerable to geopolitical disruption.