Oil prices rose on Wednesday after Yemen’s Iran-aligned Houthi rebels said they attacked a Saudi oil tanker in the Red Sea, disrupting market expectations of a potential de-escalation in Middle East hostilities.
Houthi attack reported near Yanbu port — The Houthis stated they launched a missile strike on the Saudi oil tanker Wafa off the coast of Yanbu, a key port for Saudi crude oil exports. The group claimed the attack was part of an ongoing maritime blockade they imposed on Saudi Arabia on July 22, targeting oil tankers in the northern Red Sea. This marks the eighth Saudi oil vessel reportedly struck since the blockade began, according to a Houthi military spokesman.
Oil markets react to geopolitical uncertainty — Brent crude futures climbed $1.51 (1.9%) to $80.87 per barrel by 11:23 GMT, while U.S. West Texas Intermediate (WTI) futures rose $0.90 (1.19%) to $76.67 per barrel. The rebound followed a 5% drop in oil prices on Tuesday, when investor optimism about a potential ceasefire briefly pushed Brent crude below $80 per barrel—its lowest level since July 13. Analysts cited the attack as a key factor reversing earlier market gains tied to reported progress in Middle East peace talks.
Saudi officials did not immediately respond to requests for comment on the reported strike.
Regional Tensions and Maritime Disputes
Houthi blockade intensifies pressure on Saudi Arabia — The Houthis declared they would escalate attacks in the northern Red Sea after Saudi Arabia rerouted oil tankers away from the southern Strait of Hormuz, which remains a critical shipping route. The group justified the blockade as a response to Saudi-led military operations in Yemen. U.S. Central Command stated on Tuesday that the southern route of the Strait of Hormuz, passing through Omani waters, remained "free and open" to commercial vessels.
Strait of Hormuz talks advance amid conflicting claims — President Donald Trump said on Tuesday that a deal regarding the Strait of Hormuz could be announced "as early as today or tomorrow," following reports of progress in indirect talks between Iran and Oman. The proposed agreement would allow ships to enter the Persian Gulf via an Iranian-controlled route and exit through an Omani-controlled corridor, with service fees charged for security and environmental protection. Two anonymous regional officials told The Associated Press that the framework was under discussion, though no formal announcement had been made by Wednesday.
The Trump administration has previously rejected any deal that would grant Iran control over the strait, which the U.S. and Israel have described as an international waterway. Trump reiterated his opposition to tolls in the strait, stating, "I'm not going to let that happen."
Iran, meanwhile, denied that peace talks were underway, contradicting Trump’s assertions. A spokesperson for Iran’s foreign ministry stated that reports of negotiations were "baseless."
Market and Supply Chain Implications
Oil inventories and global trade shifts — U.S. crude and gasoline inventories rose last week, while distillate stocks fell, according to data cited from the American Petroleum Institute. Analysts noted that the reported Houthi attack added a geopolitical risk premium to oil prices, despite earlier optimism about a potential ceasefire.
China further relaxed fuel export controls in August, a move that could increase global supply and ease some pressure on oil markets. The relaxation follows prior easing of restrictions in June, aimed at stabilizing domestic fuel prices amid high global energy costs.
Broader supply concerns persist — Analysts warned that the underlying supply picture remains tight, with the Strait of Hormuz—a chokepoint for 20% of the world’s oil and liquefied natural gas (LNG)—remaining a flashpoint. The main dispute centers on whether Iran will insist on control over the waterway and whether the U.S. will accept any such arrangement.
IG analysts noted in a market commentary that the "sticking point appears to be whether Iran will continue to insist on a degree of control over the waterway, and whether the U.S. will stand its ground and refuse that outcome."
UBS analyst Giovanni Staunovo added that while the immediate geopolitical premium had unwound, "the broader supply picture warrants caution."