Brent posts 13.5% weekly gain as Red Sea attacks raise dual chokepoint risk
Crude prices are posting their largest weekly gains in months after Houthi attacks on Saudi tankers raised the threat of simultaneous disruptions at the Strait of Hormuz and the Red Sea.
Brent crude dipped slightly to $99.68 a barrel on July 24 but remained on track for a 13.5% weekly surge, while WTI futures fell to $91.49, heading for an 11% weekly gain. The sharp rally, which saw Brent close above $100 on Thursday for the first time since May, follows claims by Iran-aligned Houthi rebels that they attacked two Saudi oil tankers in the Red Sea.
The strikes have intensified fears that the Bab el-Mandeb strait, the world's second-busiest oil transit channel connecting the Red Sea to the Indian Ocean, could face a closure. In response to the Houthi-declared naval blockade, Saudi Arabia has already rerouted its crude exports through pipelines to bypass potential shipping bottlenecks. The Red Sea has become a critical alternative route for Persian Gulf cargoes attempting to reach buyers amid broader regional disruptions.
The Red Sea threat compounds an existing crisis at the Strait of Hormuz, the world's most vital oil chokepoint. U.S. President Donald Trump pledged to "hold Iran responsible" for any further attacks, highlighting the risk of further escalation between Washington and Tehran. With fighting between the two nations intensifying, the market is now pricing in the possibility of a two-front supply shock.
Goldman Sachs cautioned that Brent could spike to $120 a barrel if shipping through the Strait of Hormuz is disrupted. The bank's base case assumes regional tensions will eventually de-escalate, projecting Brent will average $80 in the fourth quarter and $75 next year. However, analysts noted the forecast risks are "tilted to the upside" given the simultaneous threats to both the Strait of Hormuz and the Red Sea.
Anindya Banerjee, Head of Commodity Research at Kotak Securities, noted that prices are now dictated by geopolitical peril rather than military action alone. "Any strike on major Gulf export infrastructure could force a retest of $95-100 and beyond," he said. Banerjee warned that tanker traffic through the Strait of Hormuz remains well below pre-war levels as Tehran introduces new conditions for negotiations, effectively stalling any diplomatic resolution.
