Oil settles up more than 3% to six-week high as Mideast conflict threatens oil transit routes

Jul 23, 2026 News

(Reuters) – Oil prices settled at their highest since 11^th June on Wednesday on mounting supply concerns as hostilities continued to escalate between the U.S. and Iran, while threats to by the Iran-backed Houthi militia in Yemen further boosted prices.

Brent crude futures settled up $3.06, or 3.36%, at $94.07 a barrel, their highest in just shy of six weeks, after hitting a session high of $95.47.

The Brent crude three-month timespread, meanwhile, expanded to $9.26 a barrel, its widest since 22^nd May , deepening backwardation on mounting supply risks. Backwardation is where prompt crude trades above later-dated barrels, typically signalling tighter near-term supply.

The U.S. military said it carried out an 11th consecutive night of attacks on Iran. The U.S. attacks came a short while after the Kuwaiti army said ⁠its air defences were intercepting Iranian drones.

Oil settles up more than 3% to six-week high as Mideast conflict threatens oil transit routes

General view of Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia, 21st May, 2018. REUTERS/Ahmed Jadallah/File Photo

President Donald Trump said on Wednesday the U.S. would “bomb and destroy one bridge or power plant” any time Tehran targets a ship in the Strait of Hormuz.

Iran’s Revolutionary Guards’ spokesperson warned shipping companies that the Strait of Hormuz southern route is mined in a post on X.

As well as the renewed conflict over control of that key waterway, the Iran-aligned Houthis have opened a new front in the war by threatening to target vessels carrying Saudi oil in the Bab el-Mandeb Strait and announced a naval blockade of Saudi Arabia.

Ships with links to Israel, the United States or Saudi Arabia are at a higher risk of being attacked by Yemen’s Iran-aligned Houthi militia and are advised to avoid voyages through the Red Sea and Gulf of Aden, the European Union’s naval force Aspides said on Wednesday.

“The energy market now has the dual-strait worry, with the Bab el-Mandeb Strait looking like it could join the Strait of Hormuz as a hot , as ⁠traders closely watch shipping numbers in the Red Sea,” said Tim Waterer, chief market analyst at KCM Trade.

Bab el-Mandeb at the southern entrance to the Red Sea has become an increasingly important route for Saudi Arabian crude exports as traffic through the Strait of Hormuz has fallen sharply again since a ceasefire between the United States and Iran collapsed earlier this month.

Five tankers in the Red Sea to avoid the Bab el-Mandeb Strait on Wednesday after the Houthis’ threat to block Saudi oil exports.

“Heightened supply disruption fears are ⁠mounting as intensified conflict and security risks in the Red Sea force commercial vessels and tankers to alter trade routes,” said Gelber & Associates analysts in a note.

In response to the Houthi warnings, Asian refiners are seeking to ship crude oil from Saudi Arabia’s Red Sea port of Yanbu through the Suez Canal and around Africa.

“The (Houthi) threat has led tankers to divert which ⁠could further pressure the physical market and Saudi exports, contributing to push prices to the upside,” said Frank Walbaum, market analyst at trading platform Naga.com.

Meanwhile, U.S. crude stocks rose last week, the Energy Information Administration said, as refinery runs eased and crude exports dropped while imports rose.

Crude inventories rose by 2 million barrels to ⁠411.7 million barrels in the week ended 17^th July, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.1-million-barrel draw.

Elsewhere, EU ambassadors failed on Wednesday to agree on a 21st package of sanctions against Russia over its invasion of Ukraine, an EU diplomat said.

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Mideast, Oil prices, oil transit routes

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