Is Oil's Next Stop $120 Per Barrel? Red Sea Attacks and Iran War Spark Supply Panic

Global oil markets remained on edge on Friday as Brent crude traded above $100 a barrel and continued its march towards the psychologically important $120 level, fuelled by fears that the widening U.S.-Israel-Iran conflict could severely disrupt global energy supplies.

Brent crude futures rose 37 cents, or 0.37%, to $101.06 a barrel by 0330 GMT after surging 7% in the previous session to settle above $100 for the first time since May.

The benchmark is now on track for a weekly gain of nearly 15%, its fourth consecutive week of advances.

U.S. benchmark West Texas Intermediate (WTI) crude was little changed at $91.20 a barrel, hovering near its highest level since June 11 and set for an almost 12% weekly rise.

The latest rally follows attacks by Iran-backed Houthi rebels on two Saudi oil tankers in the Red Sea, intensifying concerns that key global shipping routes are becoming increasingly vulnerable.

Hormuz and Red Sea disruptions amplify supply concerns

Oil markets are increasingly pricing in the possibility of prolonged supply disruptions as two of the world's most critical energy chokepoints—the Strait of Hormuz and the Bab el-Mandeb Strait—face mounting security threats.

According to shipping analytics firm Kpler, only one oil tanker crossed the Strait of Hormuz on Thursday, marking the lowest daily traffic since early May, Reuters reported.

The strait, through which roughly one-fifth of global oil consumption normally passes, has witnessed a sharp decline in vessel movements following escalating regional hostilities.

The Bab el-Mandeb Strait, linking the Red Sea to the Indian Ocean, has also emerged as a flashpoint after the Houthis declared a naval blockade on Saudi Arabia earlier this week and subsequently targeted Saudi tankers.

Analysts warn that disruptions across both routes significantly raise the risk of tighter global crude supplies.

Trump blames Iran as geopolitical tensions intensify

The geopolitical backdrop remains highly volatile. U.S. President Donald Trump warned that Washington would hold Iran responsible for any further attacks by Tehran-backed groups.

Iran has reportedly encouraged the Houthis to target the Bab el-Mandeb Strait after a temporary truce with the United States collapsed earlier this month, raising fears that the conflict could spill further into vital maritime trade corridors.

With two strategic export routes simultaneously under pressure, traders remain focused on whether additional disruptions could tighten global supplies further.

Analysts warn risks are greater than at any point in the conflict

The growing threat has heightened speculation that Brent could continue climbing if military tensions intensify or if additional export infrastructure comes under attack, reports said.

With exports through both Hormuz and the Red Sea facing disruption, with oil exporting countries including Saudi Arabia looking to increasingly rely on the Suez Canal to move crude to international markets.

According to a Reuters report citing Kpler and LSEG shipping data, transporting crude from Saudi Arabia's Red Sea port of Yanbu to Taiwan via the Bab el-Mandeb Strait normally takes around 19 days.

The alternative route via the Suez Canal and around southern Africa extends the journey to roughly 48 days.

The longer voyage nearly doubles fuel costs—from around $1.26 million to approximately $2.87 million per shipment—while transit through the Suez Canal adds another $1 million in fees.

Will Brent test $120?

While Brent remains below the $120 mark, the pace of recent gains underscores how quickly geopolitical shocks can reshape oil markets.

The combination of reduced tanker traffic through the Strait of Hormuz, attacks in the Red Sea, rising shipping costs and growing concerns over Middle East supply security has significantly increased the risk premium embedded in crude prices.

Unless tensions ease or shipping routes reopen, analysts expect volatility to remain elevated, with markets closely watching whether Brent crude extends its rally towards the $120-per-barrel threshold in the coming sessions.