Brent crude oil prices surged to $100.03 per barrel on Tuesday, the highest level in three months, after Yemen’s Houthi rebels launched drone and missile attacks on southern Saudi Arabia’s energy infrastructure. The assault wounded 73 civilians, including women and children, and forced temporary halts at Saudi Aramco facilities, including a refinery in Jazan processing 400,000 barrels per day. U.S. crude oil also climbed 2.5% to nearly $94 per barrel, while wholesale gas prices rose 1.4% to an average of $4.15 per gallon nationwide.
The attacks marked the latest escalation in a six-month conflict between the U.S. and Iran, which has repeatedly targeted each other’s assets in the region. On Saturday, the U.S. struck three Iranian oil tankers, sinking one near Iran’s main export hub of Kharg Island, in response to Iran’s ballistic missile strikes on U.S. Navy warships. Iran’s Foreign Ministry condemned the U.S. actions as a "war crime" and "economic warfare."
Saudi Arabia’s response and regional disruptions
Saudi-led coalition spokesperson Maj. Gen. Turki al-Malki labeled the Houthi attacks a "serious escalation" and vowed "deterrent measures." The assaults occurred in Abha, Jazan, Najran, and Khamis Mushait, with fires reported at multiple Saudi Aramco sites. The attacks follow a pattern of Houthi strikes on commercial vessels in the Red Sea, which Saudi Arabia has condemned as threats to "international maritime navigation."
Global oil supply disruptions have intensified, with traffic through the Strait of Hormuz—carrying over 20% of the world’s oil supply—collapsing to just 4–6 ships per day, down from pre-war levels of 20% of global energy supply. The Bab el Mandeb strait, another critical chokepoint, saw a 16% drop in vessel transits from the prior week, though traffic remained above 260 ships. Goldman Sachs raised its oil price forecasts, projecting Brent at $85 per barrel by December 2026 and $80 in 2027, with potential upside to $120 if Gulf output remains 4 million barrels per day below pre-war levels.
U.S.-Iran tensions and market reactions
The tit-for-tat strikes have kept energy markets on edge, with diesel prices hitting record highs and European gas prices reaching a three-year peak. U.S. Energy Secretary Chris Wright stated that reaching a deal with Iran to prevent nuclear weapon development may now be "impossible." Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned on social media that "strike our assets and you get struck," while U.S. Defense Secretary Pete Hegseth reiterated that the U.S. would "destroy and sink" Iranian oil tankers if Iran fired on U.S. vessels.
Political and economic fallout
The surge in oil prices has intensified political pressure on U.S. President Donald Trump, who had previously claimed that victory over Iran would lead to "precipitously" falling oil and gas prices, with gasoline potentially dropping below $2 per gallon. Current national averages stand at over $4 per gallon for gasoline and nearly $6 for diesel, posing a significant challenge ahead of the November midterm elections, where the cost of living is a defining issue.
Saudi Arabia, the world’s largest oil exporter, has warned that energy infrastructure across the Gulf—including U.S. interests—remains vulnerable. Despite the heightened risks, some oil continues to transit the Strait of Hormuz, with estimates suggesting 8 million barrels per day are still leaving the Persian Gulf, though tankers are increasingly switching off transponders to avoid detection.
Analysts warn that the conflict’s persistence could prolong supply constraints, with Goldman Sachs and Marex analyst Ed Meir both predicting elevated crude prices through 2026 if disruptions continue. The bank’s revised forecasts assume Middle East shipping disruptions lasting into 2027, with production recovery not expected until the second half of that year.
Stock markets reflected the turmoil, with Dow futures dropping 0.8% (over 400 points) as oil prices extended gains for a third straight day. The conflict’s broader implications for global energy security and geopolitical stability remain uncertain as both sides signal no immediate path to de-escalation.