Oil surges past $107 as Houthi forces complete takeover of Red Sea strait

Oil prices surged on Monday after Yemen's Iran-aligned Houthi movement completed a week-long offensive that put it in control of the country's entire Red Sea coastline, including the shoreline and islands framing the Bab el-Mandeb Strait, one of the world's busiest oil-shipping corridors. Brent crude, the global benchmark, rose 3 percent, or $3.21, to $107.82 a barrel, while West Texas Intermediate gained a comparable amount to close at $103.22, according to trading data reported by Al Jazeera. Brent had briefly touched $109 a barrel earlier in the week as the offensive unfolded.

The advance gave Houthi forces effective oversight of the strait's Yemeni shore for the first time, after fighters captured the port town of Mocha, the coastal settlements of Dhubab and Al Khawkhah, and, decisively, Mayun (Perim) Island, which splits Bab el-Mandeb into its two navigable channels. Greater and Lesser Hanish islands followed over the weekend. The fighting killed more than 500 people and displaced roughly 46,000, according to figures reported by NBC News.

The numbers behind the spike

Bab el-Mandeb is narrow — about 18 miles across at its tightest point, funneling traffic into two lanes roughly two miles wide — but it carries an outsized share of world trade. Before Houthi attacks on shipping began in November 2023, roughly 9.3 million barrels a day of crude oil and petroleum products moved through the strait; by 2024 that had fallen to about 4.1 million barrels a day, a decline of more than half, as vessel owners rerouted around Africa's Cape of Good Hope instead, according to chokepoint data compiled by the US Energy Information Administration. The detour adds roughly ten to fourteen days to a voyage between the Gulf and Europe.

Monday's advance came on top of a separate, larger disruption in the Strait of Hormuz tied to the wider confrontation between Washington and Tehran that has run since earlier this year — a conflict that briefly drove Brent to an intraday high of $126.41 in late April, its highest level since Russia's 2022 invasion of Ukraine. US Energy Secretary Chris Wright said Monday that Hormuz flows had recovered to "two-thirds or north of two-thirds" of pre-crisis volumes, roughly 10 million barrels a day, and that markets were "not overly tight," even as tanker transits through the strait had fallen to single digits over the weekend, far below a roughly 14-per-day average recorded before the conflict began. The compounding disruptions have pushed the US national average diesel price above $6 a gallon for the first time on record, up from $3.70 a year earlier, a jump Bloomberg attributed to overlapping shocks including the Hormuz standoff, Russian refinery strikes, a Russian export ban and tighter Chinese export quotas, in addition to the Red Sea disruption.

How the Houthis took the Bab el-Mandeb shoreline

Monday's territorial gains cap nearly three years of Houthi interference with Red Sea shipping, which began as missile and drone strikes on commercial vessels in solidarity with Hamas after the October 2023 Gaza war and evolved into a broader campaign that has, at various points, sunk vessels, killed seafarers and forced most container lines away from the route entirely. This latest phase differs in kind: rather than striking ships at sea, Houthi ground forces pushed south along Yemen's coast against Saudi-backed government forces, seizing physical control of the strait's eastern shore and its islands within about a week. A Houthi politburo member sought to reassure commercial shippers that "freedom of navigation and international trade in the Red Sea and Bab el-Mandeb are safe and orderly" for everyone but Saudi-linked vessels, which the group has placed under a declared embargo since July. Qatar, among the Gulf states most dependent on the waterway, warned that any closure of the strait would be "catastrophic" for the region.

Saudi Arabia has also been hit directly: a drone strike knocked out the kingdom's 1,200-kilometer East-West pipeline, which was built specifically to move crude to the Red Sea coast and bypass Hormuz, and which carries volumes equivalent to roughly 4 percent of global supply. Crown Prince Mohammed bin Salman has pressed the Trump administration for military strikes on Houthi positions; Washington has so far declined direct action but is providing targeting intelligence, and the US Central Command chief, Admiral Brad Cooper, flew to Jeddah on Monday to meet the crown prince as the crisis deepened.

Shippers, insurers and energy importers absorb the shock

War-risk insurance for vessels transiting Bab el-Mandeb has climbed to roughly 0.5 percent of a ship's hull value, up from 0.3 percent before the Houthi embargo was declared in July, effectively adding hundreds of thousands of dollars to the cost of a single voyage; premiums for Hormuz transits have risen even further, from about 0.25 percent to as much as 3 to 10 percent of hull value. Container and tanker operators that had cautiously begun testing a return to the Red Sea route earlier this year are again facing pressure to divert around southern Africa, lengthening supply chains and adding to freight costs that are ultimately passed to consumers of everything from fuel to electronics.

"The key question for oil markets is no longer whether Brent can break above $100. It already has," said Priyanka Sachdeva, an analyst at Phillip Nova, in remarks reported by The National as the offensive unfolded last week.

Washington and London respond, cautiously

The UK Foreign, Commonwealth and Development Office said in a statement that it "strongly condemns the Houthis' decision to resume conflict in Yemen," warning that the group's actions "endanger wider regional stability, and freedom of navigation and vital trade routes through the Red Sea and Bab al-Mandeb," and calling for an immediate halt to the escalation. President Trump, for his part, has characterized the US posture in the Gulf as one of "total control," saying American forces are escorting tankers through Hormuz, a claim that sits uneasily against the collapse in transit numbers reported over the weekend. Iranian officials, whose forces separately maintain pressure on Hormuz, hailed the Houthi advance as a "resounding victory."

The EIA's most recent Short-Term Energy Outlook, published September 9, raised its Brent price forecast by $8 a barrel from the prior month, to an average of roughly $90 in the second half of 2026, and said it assumes "some constraints to exporting oil from the Middle East will persist through the end of the year," with regional production unlikely to return through alternative routes to pre-conflict levels before the second quarter of 2027. That forecast average sits well below Monday's spot price, underscoring how much of the current move reflects an acute risk premium rather than a durable shift in supply. Until the standoff is resolved, analysts expect oil prices to stay volatile and elevated, with any renewed vessel attacks or a wider closure of the strait carrying the risk of a fresh spike beyond current levels.