International oil prices surged after Houthi rebels attacked a tanker in the Red Sea near Saudi Arabia, with Brent crude September futures rising 2% to $95.9 per barrel at 2pm local time on the London ICE Futures Exchange. The Iran-aligned Yemeni group claimed responsibility and had declared a maritime blockade against Saudi Arabia on the 20th. The Bab el-Mandeb Strait carries approximately 4% of global oil shipments and combined with Hormuz could disrupt 25% of world energy supply.
Brent Crude Reaches Six-Week High at $95.9 Per Barrel
Brent crude September futures prices exceeded $95 per barrel for the first time in six weeks, reaching $95.9 with a 2% increase from the previous trading day at 2pm local time. West Texas Intermediate (WTI) August futures also rose 1.5% to $88.1 per barrel. The price surge occurred after reports emerged of the tanker attack in the Red Sea waters near southwestern Saudi Arabia.
Bab el-Mandeb Strait Controls 4% of Global Oil Transport
The Bab el-Mandeb Strait serves as the connecting passage between the Red Sea and the Arabian Sea, functioning as the gateway to the Suez Canal. Approximately 4% of global oil transport passes through this strait. Saudi Arabia has shipped approximately 4.5 million barrels of oil and fuel daily through the Yanbu port in the Red Sea following the US-Iran conflict, with about 70% destined for Asia. Consulting firm Stratas Advisors stated that oil prices could exceed $115-120 per barrel. Transportation and insurance costs are also likely to increase. According to the Korea Institute for International Economic Policy, maritime freight rates increased sixfold during the December 2023 Houthi attacks on Red Sea commercial vessels.
World Bank Warns Global Growth Could Drop to 1.3%
Analysts suggest that if energy supply shocks lead to inflationary pressure, the global economy could fall into recession. Indermit Gill, Chief Economist at the World Bank, told Reuters that "the worst-case scenario of Middle East tensions persisting for more than six months appears to have already materialized" and warned that "global economic growth could fall to 1.3%." The Korean economy also faces unavoidable impact. Kim Tae-hwang, professor of international trade at Myongji University, projected that "if the Middle East issue becomes prolonged until after the US midterm elections in November, Korea's growth rate could fall to the early 2% range in the worst case."
FAQ
What caused Brent crude oil prices to reach $95.9 per barrel?
Brent crude September futures rose 2% to $95.9 per barrel at 2pm local time on the London ICE Futures Exchange following a Houthi rebel attack on a tanker in the Red Sea near southwestern Saudi Arabia. The Iran-aligned Yemeni Houthi rebels claimed responsibility for the attack and had declared a maritime blockade against Saudi Arabia on the 20th.
How much of global oil transport could be disrupted by the Bab el-Mandeb and Hormuz straits?
The Bab el-Mandeb Strait carries approximately 4% of global oil shipments. Combined with the Strait of Hormuz, these two passages could potentially disrupt 25% of the world's energy supply. Saudi Arabia has been shipping approximately 4.5 million barrels of oil and fuel daily through the Yanbu port, with about 70% headed to Asia.
What economic impact did the World Bank predict from prolonged Middle East tensions?
Indermit Gill, Chief Economist at the World Bank, told Reuters that the worst-case scenario of Middle East tensions persisting for more than six months appears to have already materialized, warning that global economic growth could fall to 1.3%. Consulting firm Stratas Advisors stated that oil prices could exceed $115-120 per barrel.
