Oil prices leaped past $100 a barrel on Thursday. Saudi Arabia suddenly sits at the center of a volatile mix of geopolitics and energy markets. The kingdom’s tankers came under attack in the Red Sea. Its new nuclear agreement with the U.S. adds another layer of tension with Iran.
Brent crude futures climbed above the key psychological mark for the first time since early June. They settled near $101. The surge reflects fresh disruptions in two critical shipping chokepoints. Analysts warn prices could test $120 if the situation worsens. That’s no small jump.
The attacks came from Yemen’s Iran-aligned Houthis. They claimed strikes on two Saudi oil tankers avoiding the dangerous Strait of Hormuz. Those tankers now face longer routes around Africa. Insurance costs rise. Delivery times stretch. Saudi Arabia had already rerouted much of its exports via pipelines to dodge Iranian threats in the Persian Gulf.
“The net effect of this nuclear deal is escalatory,” said Jennifer Li, senior geopolitical analyst at Rystad Energy. She spoke to Fortune. “There isn’t really a scenario in which the Iranians will view this favorably. The Iranians have positioned the Houthis, in theory, to go out and target this embargo specifically of Saudi vessels.”
But the timing feels deliberate. On Wednesday the U.S. signed a deal to help Saudi Arabia build a civilian nuclear program. The pact came just as Washington seeks to curb Iran’s nuclear advances. President Donald Trump added conditions Thursday. He demanded Saudi participation in the Abraham Accords with Israel. No uranium enrichment allowed under the terms he outlined.
Critics pounced. Democratic Sen. Chris Murphy of Connecticut called the agreement a trigger for regional nuclear competition. It abandons nonproliferation goals, he argued in a statement reported by Fortune. Li sees the pact as an expedited wartime concession. It pushes American nuclear technology into the kingdom instead of Russian or Chinese options. National security arguments support that shift.
The Houthis acted with their own history in mind. Decades of conflict with Saudi Arabia fuel their moves. Fernando Ferreira, director of geopolitical risk at Rapidan Energy Group, noted the group seized an opportune moment in the broader Iran conflict. “The risk here is certainly skewed towards a return of a regional war in the Middle East that could be more disruptive than what we saw in the first round of the confrontation,” he told Fortune. The Red Sea factor changes everything from earlier phases.
Recent reports confirm the escalation. The Hill detailed how Houthi strikes on Red Sea tankers drove the price spike. Brent crossed $100, up more than $25 from levels during a short-lived U.S.-Iran ceasefire. Houthis announced attacks on two Saudi vessels. That news hit markets hard.
MarketWatch added context on the same day. Global oil settled at a two-month high after the tanker claims. President Trump threatened “military punishment” on Iran. Yemen’s militants launched strikes on Saudi Arabian tankers in the Red Sea, according to the report. Futures reacted sharply.
Trump took to social media. “If they do this again, the U.S. will hold Iran responsible, in that the Houthis are a surrogate and/or proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves,” he posted. The message amplified market jitters. It also signaled possible direct U.S. involvement.
Shipping routes tell part of the story. The Bab el-Mandeb strait, known as the “gate of tears,” now carries fresh risks. Tankers diverting from Hormuz already faced pressure. Now they contend with Houthi naval threats in the Red Sea. Routes via the Suez Canal and around Africa add substantial costs. Fuel. Insurance. Time. All climb.
Ferreira expects measured Houthi actions for now. “In a final round, we could start seeing attacks on Saudi energy facilities, but the Houthis understand this is the greatest point of leverage that they have over Riyadh,” he said in the Fortune interview. Yet the potential for wider disruption looms. Kazakhstan cut production after Ukrainian drone strikes on Russian Black Sea terminals. Storage overflow fears drove that decision on July 23.
Gasoline prices in the U.S. reflect the strain. The average for regular unleaded climbed back to $4.09 a gallon. And it keeps rising. Consumers feel it at the pump. Industries pass on higher costs. Supply chains adjust. The ripple effects spread.
Li pointed to a “who blinks first” dynamic. Both sides adopt more extreme positions. Tehran sees the Saudi nuclear deal as provocation. Riyadh gains strategic ground but invites retaliation. The U.S. balances alliances with nonproliferation concerns. No easy path exists.
Recent X posts captured the moment. Users noted Trump’s vow of punishment as oil surged. One account highlighted the link between Houthi actions and potential $120 oil. Discussions on currency impacts in Iran circulated too. Real-time sentiment tracked the volatility.
Earlier coverage from Reuters in March offered precedent. Oil settled above $100 as Houthis joined the Iran conflict. Attacks on Israel widened the fight. Saudi exports from the Red Sea drew concern. G7 nations signaled readiness for energy stability measures. Those themes echo today. Reuters reported the details.
The Globe and Mail noted renewed U.S.-Iran negotiation hopes offset some Houthi threats four days ago. Yet a naval blockade against Saudi Arabia raised alarms. About 2.5 million barrels per day of Saudi oil sit at risk, according to Rystad’s Jorge León. “If a ceasefire does not materialize and Hormuz remains largely closed while the Houthi threat to Red Sea shipping intensifies, the risk of a significant rebound in oil prices would be substantial,” he said.
Ferreira sees peace between the U.S. and Iran as unlikely in the near term. The status quo proves unsustainable. Flows through Hormuz stay constrained into 2027. Sporadic attacks continue. Risks persist. Markets price in that uncertainty.
Saudi Arabia’s role grows more complex. It balances production decisions with security threats. Its nuclear ambitions align with U.S. interests but inflame rivals. Energy facilities represent both strength and vulnerability. The kingdom’s next moves will shape oil markets for months ahead.
Analysts agree on one point. Further escalation carries heavy costs. Regional war could dwarf earlier disruptions. Supply security hangs in the balance. Prices reflect that reality today. They may signal more tomorrow.
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