Oil price rebounds after Houthi attack on Saudi oil tanker in Red Sea

Brent crude climbed past $80 a barrel on Wednesday following an attack by Yemen's Houthi rebels on a Saudi oil tanker in the northern Red Sea, reigniting fears of disruptions to global oil supplies. The assault on the Saudi vessel Wafa near Yanbu came as tensions remained high in critical shipping routes, including the Strait of Hormuz, a vital artery for Middle Eastern oil exports. Prices fluctuated throughout the day, with Brent rising 1.49 percent to $80.54 a barrel and West Texas Intermediate (WTI) gaining nearly 1 percent to $76.46. Analysts warned that further escalations could trigger a real supply crisis, given that around a fifth of the world’s oil passes through the Strait of Hormuz. The attack followed a period of volatility in oil markets, driven by conflicting reports on U.S.-Iran negotiations and ongoing concerns over regional stability. On Tuesday, oil prices had plunged more than 5 percent as doubts grew over whether a breakthrough in talks between Washington and Tehran was imminent. Brent fell below $80 for the first time since early July, briefly dipping toward $77 before recovering slightly. U.S. President Donald Trump had previously announced plans to restart talks with Iran, though Iran dismissed these claims, stating that its only active discussions were with Oman regarding the reopening of the Strait of Hormuz. Analysts noted that Trump’s repeated announcements of potential deals appeared to follow a pattern of continued attacks despite declared pauses, raising questions about the reliability of such signals. The Houthi rebels claimed responsibility for the strike on the Wafa, asserting that their missile attack was “precise.” However, they did not provide details on the extent of damage or casualties, leaving many unanswered questions. Saudi authorities have not yet issued a formal response, though officials have historically downplayed such incidents. Meanwhile, the Houthi threat to Saudi-linked vessels has persisted, with the group issuing warnings against foreign ships operating in the Red Sea. Despite these threats, two Pakistan-flagged tankers successfully navigated the Bab Al Mandeb Strait, connecting the Red Sea to the Gulf of Aden and the Indian Ocean, after loading crude at Saudi Arabia’s Yanbu port, according to maritime intelligence firm Windward. This movement underscored the resilience of some shipping lanes, even amid heightened tensions. Analysts from Dubai-based investment firm Asas Capital emphasized the potential for a genuine supply shock should tensions escalate further. They noted that the Strait of Hormuz remains a focal point, with only nine tankers passing through the strait compared to the usual 130–140 daily during pre-conflict conditions. The International Energy Agency estimated that traffic through the strait had dropped from 20 million to just 6 million barrels per day. Such a dramatic decline highlights the fragility of global energy markets and the growing influence of geopolitical instability on pricing dynamics. Despite the recent price rebound, uncertainty persists. The U.S. Central Command confirmed that the southern route of the Strait of Hormuz, which runs through waters controlled by Oman, remained open for commercial vessels. This came after Treasury Secretary Scott Bessent suggested that an agreement to reopen the strait might be reached within the week. However, the broader picture remains unclear, with analysts cautioning that a collapse in negotiations could swiftly shift market sentiment back toward bullish expectations. The situation underscores the complex interplay between diplomacy, military posturing, and economic outcomes in the volatile landscape of the Middle East.