Meanwhile, U.S. West Texas Intermediate crude continued its upward momentum for a second consecutive session. WTI surged more than 5%, approaching $92 per barrel and reaching its highest price since June 11. The rapid gains reflected mounting concerns that the conflict in the Middle East could place even greater pressure on already strained oil supplies.
The latest spike followed reports that Iran-backed Houthi rebels claimed responsibility for attacks on two Saudi oil tankers operating in the Red Sea. The announcement came only days after the group declared a naval blockade targeting Saudi Arabia, raising alarm that the conflict is expanding into another strategically vital maritime corridor.
Until now, much of the world’s attention had remained focused on the Strait of Hormuz. However, the reported tanker strikes suggest the confrontation may now be spreading into the Red Sea, creating fresh uncertainty for global shipping companies and energy markets alike.
One of the biggest concerns centers on the Bab el-Mandeb Strait, one of the world’s most important maritime chokepoints. Millions of barrels of crude oil pass through the narrow waterway every day, while approximately 12% to 15% of global maritime trade—valued at more than $1 trillion annually—also moves through the corridor. Any sustained disruption could ripple across international supply chains and further increase energy costs worldwide.
The strategic importance of the Bab el-Mandeb has grown significantly as traffic through the Strait of Hormuz has reportedly slowed dramatically. Ship crossings in Hormuz reportedly dropped into the single digits earlier this week, forcing many shipping companies to reconsider their routes amid rising security concerns.
The market’s latest rally has been nothing short of remarkable. Oil prices have now climbed roughly 35% since the beginning of the month and have surged more than 60% since the start of the year, highlighting the growing impact of geopolitical instability on global commodity markets.
American consumers are already beginning to experience the effects.
According to AAA, the national average price for a gallon of regular gasoline climbed to $4.09 on Thursday, up from $4.06 just one day earlier. The increase erases much of the relief drivers experienced after the United States and Iran reached a memorandum of understanding in mid-June—a deal that has since unraveled as hostilities intensified.
President Donald Trump responded forcefully to the escalating crisis on Wednesday, warning that the United States would answer any additional attacks on commercial shipping with overwhelming force. The president threatened to destroy Iranian infrastructure if Tehran continued targeting commercial vessels operating in the region.
Only hours after those remarks, the Houthis announced they had targeted two Saudi oil tankers navigating the Red Sea, intensifying concerns that the conflict is entering a dangerous new phase.
The United Kingdom Maritime Trade Operations agency reported that a tanker north of the Bab el-Mandeb Strait had been “struck by an unknown projectile.” Separately, Saudi state media reported that the tanker Encelia caught fire during an overnight attack in the Red Sea, citing an unnamed source from the General Authority of Transport. The report did not mention the tanker Layla.
Financial analysts say the renewed violence is once again putting inflation squarely back into focus.
“Inflation has remained top of the agenda for markets this morning,” said Deutsche Bank global head of macro research Jim Reid, citing the surge in Brent crude. “Indeed, the strikes between the US and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening.”
The renewed inflation fears quickly spread beyond energy markets and into the broader financial system.
The benchmark 10-year U.S. Treasury yield climbed to 4.67% early Thursday, marking its highest level since January 2025. Rising Treasury yields typically translate into higher borrowing costs for consumers and businesses alike.
Homebuyers are already beginning to feel the impact. On Wednesday, the average interest rate on a 30-year fixed mortgage rose to 6.77%, reaching its highest level since July 2025. With energy prices climbing, inflation concerns resurfacing, and borrowing costs continuing to rise, investors are increasingly watching whether the expanding conflict in the Middle East could trigger another wave of economic pressure both in the United States and across the global economy.
