Conflicts in the Middle East escalate, crude oil prices surpass $100 per barrel.
Tensions in the Middle East escalated significantly after the US resumed airstrikes on Iran and Houthi forces attacked oil tankers in the Red Sea. This event pushed Brent crude oil prices above $100 per barrel for the first time since May.
On July 24, the US launched new airstrikes against Iran after Tehran-backed Houthi rebels attacked oil tankers in the Red Sea, marking a dangerous escalation in the global energy market. The US military maintains that the Strait of Hormuz – which carries one-fifth of the world's oil – remains open to shipping. However, Iran continues to attack ships using this route to demand safe passage fees. The Houthis' opening of a new front in the Red Sea this week further exacerbates fears of supply shortages.
The immediate consequence was that the price of international benchmark Brent crude oil surged 8%, surpassing the $100/barrel mark on July 23rd, its highest level since May, causing great concern in the international community.
President Donald Trump declared that the U.S. would hold Iran accountable for the Houthi forces' actions and warned that both sides would soon face "major military punishment." He also pledged to use frozen Iranian assets to compensate for maritime damage, which Tehran criticized as "an inciting precedent."
This move comes as the US military completed its 13th consecutive night of airstrikes targeting Iranian military targets to contain the Islamic Revolutionary Guard Corps (IRGC). Iranian media reported that US missiles struck the city of Ahvaz (southwest Iran), and also recorded multiple explosions in Omidiyeh, the port city of Bandar Abbas, and Qeshm Island in the Strait of Hormuz.
UN Secretary-General Antonio Guterres warned against further escalation. "The situation is spiraling out of control. It is teetering on the brink of the unimaginable," he said at a UN Security Council meeting. European Central Bank President Christine Lagarde warned that the energy shock could worsen, pushing inflation higher and fueling speculation of a Eurozone interest rate hike in September.
Conflict flared up again just weeks after a brief ceasefire, plunging the region into chaos as Washington and Tehran vied for control of the Strait of Hormuz.
