Two straits, one crisis
Brent crude oil surged nearly 5% to top $95 per barrel on Wednesday, the highest level in six weeks, as simultaneous disruptions hit the Strait of Hormuz and the Bab el-Mandeb strait. Only nine ships crossed Hormuz on Tuesday — a fraction of normal traffic — while Houthi rebels in Yemen declared a maritime blockade on Saudi Arabia, threatening the Red Sea route. ING commodities analysts said tankers are already diverting, forcing longer voyages around Africa via the Cape of Good Hope, adding time and expense to shipments to Asia.
Gas prices climb, war costs mount
The U.S. national average gas price rose to $4.06 per gallon, according to AAA. Since January, oil prices have gained more than 55%, erasing the decline that followed the short-lived U.S.-Iran memorandum of understanding in June. Defense Secretary Pete Hegseth testified before the Senate that the Iran war has cost $37.5 billion so far, as the Pentagon seeks a $1.5 trillion budget including $70 billion for the conflict.
Markets brace for prolonged disruption
Analysts at MarineTraffic reported growing evidence of vessels hesitating to approach the Gulf of Aden. The Bab el-Mandeb risk picture is deteriorating rapidly. With both major oil transit chokepoints under threat and diplomacy stalled — Rubio stated Iran is not serious about negotiations — energy markets are pricing in a prolonged period of supply uncertainty.