NEW YORK (Realist English). The oil market is ending a week that could be called a turning point since the start of the war in the Persian Gulf. On July 23, Brent closed above $100 per barrel for the first time since May — at $100.69.
On July 24, prices corrected but remained near the psychological threshold: Brent is trading in the $98–101 range, while WTI is at $90–92. Over the week, Brent gained more than 14%, WTI nearly 13%.
Two Straits Under Attack: How the Houthis Opened a Second Front
The main driver of the rally was the escalation in the Red Sea. On July 23, Iran‑backed Yemeni Houthis claimed an attack on two Saudi oil tankers in the Bab el‑Mandeb Strait. This opened a second critical chokepoint for global oil supplies, alongside the virtually paralysed Strait of Hormuz.
The situation is further aggravated by:
- Strait of Hormuz — on Thursday, only one tanker passed through — the lowest since May 7.
- Bab el‑Mandeb — the Houthis have declared a naval blockade of Saudi Arabia, which had previously used this route extensively to bypass Hormuz.
- Kazakhstan — temporarily cut production after halting shipments through the CPC terminal in Novorossiysk following Ukrainian drone attacks.
As ING analysts noted, “potential oil supply disruptions are currently the most serious of this entire war.”
Trump Threatens “Massive Attack”
US President Donald Trump has promised “massive military punishment” for Iran and the Houthis in the event of further attacks on vessels in the Red Sea.
Earlier, he had already announced preparations for a “massive attack” on Iran. Meanwhile, the US carried out a 13th consecutive night of airstrikes on Iranian targets.
JPMorgan: Each Month Adds $7–8
JPMorgan analysts, led by Natasha Kaneva, have developed a step‑by‑step price scenario based on the duration of the disruption:
- One month of disruptions — Brent will average around $94 per month.
- Three months of disruptions — each additional month adds $7–8** to the price, pushing the average monthly Brent to **~$114.
- Two months of blockade — US retail gasoline prices could exceed $4.50 per gallon** (currently $4.10).
At the same time, analysts note that $100 per barrel is only **$13 above their fair value estimate of $87 — suggesting a “modest geopolitical premium.” However, global oil inventories are at their lowest level in five years.
ING: “Disruptions Are Unprecedented”
ING analysts stressed that the passage of vessels through the Strait of Hormuz has “virtually ceased,” and the risks to Saudi oil exports through the Red Sea have become a reality.
PVM Oil Associates analyst John Evans said: “Major oil production hubs or supply routes are surrounded by war. The short‑term outlook is bullish.”
Invesco: $100+ Until August
Invesco’s head of global research, Benjamin Jones, forecasts that Brent will remain above $100 per barrel in the short term.
In his view, de‑escalation is unlikely until mid‑August, and if energy infrastructure is attacked, prices could go even higher.
Infrastructure Capital: $120 — “The Inflection Point”
Jay Hatfield, CEO of Infrastructure Capital Management, stated: “If movement in the Red Sea is minimal, we forecast $120 — that’s the inflection point for oil. If there’s no transportation, there needs to be conservation. And conservation is achieved through higher prices.”
The market is simultaneously pricing in two scenarios. On one hand, JPMorgan reminds that oil demand has fallen by 5.1 million barrels per day since the start of the conflict, softening the blow from the loss of 11.1 million barrels of supply. On the other, two key straits are effectively blocked, and inventories are at five‑year lows.
As Reuters notes, “the potential supply disruptions the market is currently facing are greater than at any point in the war.” The question is no longer whether oil will rise, but how fast and how high — and how many more nights the war, which has closed two of the world’s three key oil routes, will last.
