Crude oil futures surged more than 2% on Tuesday as the escalating conflict between the United States and Iran showed no signs of abating, while Yemen's Iran-backed Houthi rebels issued fresh warnings against ships calling at Saudi Arabian ports, raising the specter of a major disruption to global oil supply chains. Front-month Nymex crude (CL1:COM) for August delivery jumped 2.2% to $85.07 per barrel, while front-month Brent crude (CO1:COM) for September delivery climbed 2.3% to $91.27 per barrel, according to data reported by Seeking Alpha. The U.S. military completed a 10th consecutive night of strikes on Iran, as Tehran responded by targeting U.S. military sites in Bahrain, Kuwait, and Jordan.
A tanker was also struck in the Strait of Hormuz, further heightening concerns over the security of one of the world's most critical oil transit chokepoints. Iran additionally carried out attacks on Kuwaiti power generation and water desalination plants for the fourth consecutive day, deepening anxieties among Persian Gulf nations that are heavily dependent on desalination infrastructure for their basic water needs. Price gains were partially limited after a senior Iranian official reportedly confirmed that Iran had received a proposal from mediators for a 10-day ceasefire.
The initiative, aimed at salvaging a deal signed on June 17 that was intended to pave the way for a lasting agreement, injected a degree of caution into the market's bullish momentum. The Houthi threat to Saudi Arabia's Red Sea export infrastructure represents a particularly acute risk for global oil markets. The rebels warned shipowners against calling at Saudi Arabian ports, putting millions of barrels of Saudi crude exports at risk.
The port of Yanbu, a key Red Sea hub that has become a vital alternative export route since the Iran conflict nearly halted shipping through the Strait of Hormuz, sits at the center of these concerns. According to data from commodity research firm Kpler, Saudi Arabia has shipped on average more than 4.5 million barrels per day of crude and fuel from Yanbu since April, with 70% of those volumes destined for Asian markets. Kpler commodity research director Matt Smith warned in a note that a shutdown of the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden, would be "massive in the first month," with the biggest impact falling on Saudi oil flows.
Richard Bronze of consultancy Energy Aspects noted that more than 3 million barrels per day of Saudi crude currently shipped via the Red Sea to Asia could be forced onto significantly longer routes. He highlighted that fully loaded very large crude carriers (VLCCs) cannot transit the Suez Canal, while capacity on Egypt's SUMED pipeline, which links the Red Sea and the Mediterranean Sea, is fixed, creating the potential for severe logistical bottlenecks. The dual threat of continued U.S.-Iran hostilities and a potential Houthi naval blockade of Saudi export routes continues to inject a significant geopolitical risk premium into crude oil markets, with analysts and investors closely monitoring any developments that could alter the trajectory of Middle Eastern supply flows.
Source: Seeking Alpha, July 21, 2026.
Source: seekingalpha.com