strikeMay 13, 2026

Hormuz oil shock tilts shipping towards alternative fuels

Summary

Hormuz oil shock tilts shipping towards alternative fuels The current oil price shock is making alternative fuels more cost competitive in the shipping sector. LNG benefits the most, becoming even more attractive compared to conventional bunker fuels. Methanol is also becoming more viable, strengthening the case for methanol-ready vessels. Still, the emissions benefits remain limited Alternative fuels more attractive now as oil shoots higher The Middle East conflict and blockade of the Strait of Hormuz have disrupted oil supply and pushed shipping fuel prices, like marine gas oil (MGO), sharply higher. In this environment, fuel strategy is no longer just about cost, but also about securing supply and managing price risks. At the same time, higher prices and greater uncertainty are shifting the relative economics of alternative fuels, even as regulatory progress has slowed with the delayed introduction of a global carbon price under the IMO’s Net Zero Framework. Prices for Marine Gas Oil spiked due to the closure of the Strait of Hormuz MGO bunker prices in Rotterdam in $ per tonne; we’ll analyse two scenarios Our modelling shows how the costs and economics of renewable fuels of non-biological origin (RFNBOs) – also called synthetic or e-fuels – change in a high oil price scenario, from a Northwest European perspective. The Middle East war has squeezed the supply of oil and oil products. LNG is similarly affected, but less so, as more capacity is coming online, and natural gas continues to be supplied through regional production and pipelines. Our analysis translates the current geopolitical risk into a simple message for shipowners and cargo owners: when oil products spike and gas rises less, the relative economics of LNG and (to a lesser degree) methanol and even ammonia improve quickly, even if the absolute cost of all energy carriers rises. Decarbonisation requires shift to lower carbon fuels While geopolitical tensions do not alter the fundamental science behind decarbonisation, and hence emissions, they do influence the economics of the business case for different fuels. Traditional marine fuels such as marine gas oil (MGO) and very low sulphur fuel oil (VLSFO) currently generate approximately 1,900 kg of CO2 per deadweight tonne for every 1,000 kilometres sailed. This carbon footprint can be lowered by transitioning to alternatives like LNG or synthetic fuels, like methanol and ammonia. However, meaningful climate benefits are achieved only when vessels use the green or blue variants of these synthetic fuels. Just switching to grey methanol or ammonia would only worsen the footprint to 2,500 or even 4,000 kg of CO2. LNG and blue and green versions of synthetic fuels can reduce carbon emissions from shipping Indicative well to wake emissions for different shipping fuels in kilograms CO2 per deadweight tonnage per 1,000 kilometres (kgCO2/DWT/1,000km) Structural changes in fuel prices can significantly influence how and when alternative solutions are adopted within the shipping industry. To assess this impact, we examine the impact of current high prices on the business case for oil and gas-based shipping fuels and synthetic fuels like methanol and ammonia. The duration of elevated fuel prices remains a subject of intense discussion and is closely tied to ongoing geopolitical developments surrounding the closure of the Strait of Hormuz, as well as the potential damage to oil and gas infrastructure in the Middle East from further conflict. You can find our most recent scenario analysis here. In this article, we set aside geopolitical factors and focus solely on how sustained higher prices affect the cost dynamics of various fuels. When oil products remain high, LNG becomes more attractive In the high-price scenario – the one most relevant under a continued Hormuz disruption – oil products become the big movers: - MGO rises from 0.38 to 0.75 $/DWT/1,000km (+97%) - VLSFO rises from 0.30 to 0.61 (+103%) - LNG rises from 0.25 to 0.41 (+64%) The key mechanism is that the high case hits oil products harder than gas and power inputs. LNG becomes the most attractive “available now” hedge. In other words, the Hormuz-driven oil shock makes LNG not only a transitional decarbonisation option, but also commercially the most attractive option. LNG gets more competitive as the Strait of Hormuz remains closed and price gap with green and blue methanol narrows Indicative unsubsidised costs of shipping fuels in $/DWT/1,000km Methanol gains traction faster than ammonia Over the last three years, methanol has outpaced ammonia in commercial momentum in deep-sea shipping. There are four practical reasons: - Engine and vessel adaptation is simpler and faster. Methanol can be used in internal combustion engines with fewer “system-wide” changes than ammonia, which require more extensive redesign and new safety systems. - Bunkering and handling are more straightforward. Methanol is a liquid at ambient conditions, which reduces complexity compared to ammonia configurations. - A “ready now / ready later” option exists. Orders for methanol-capable and methanol-ready dual-fuel vessels have become a pragmatic bet: shipowners can run on conventional fuels today and switch as low-carbon methanol supply grows. It is also a hedge against the possibility that policy pushes faster toward low-carbon fuels than infrastructure. - From a cost perspective, methanol is currently more attractive than ammonia. Methanol’s CO2 footprint signals a downside; only blue and green deliver progress Methanol still contains carbon, which is emitted as CO2 when burned. This limits its CO2 reduction potential compared to ammonia, which is carbon‑free at the tailpipe. Only blue and green methanol deliver emission reductions relative to MGO and VLSFO and even then, the emissions reduction seems to be modest compared with LNG, at least in our framework, where methanol is currently predominantly produced from natural gas in Europe, compared to biomass (as a future green alternative), or coal (common practice in China). This matches our earlier warning: synthetic fuels can increase emissions if they are produced in a non-sustainable way, because the production chain is energy-intensive and the carbon intensity of inputs dominates outcomes. The economics and climate credentials of gas-based methanol remain challenging compared to LNG, even when produced as blue or green variants. Methanol’s biggest strategic value may be its optionality. When oil-product prices become more volatile, the value of being able to switch fuels - or at least switch procurement strategy – rises. That is precisely where dual-fuel capability becomes more than a decarbonisation story; it becomes a resilience story. The oil shock narrows the methanol–oil price gap Our model outputs show that higher prices for bunker fuels narrow the gap between methanol and marine gas oil (MGO). MGO roughly doubles in price, while methanol rises by about 50–60%. So relative competitiveness improves for methanol: while it is still more expensive, the distance between oil and methanol shrinks. But two important caveats remain. Oil products like MGO and VLSFO remain cheaper than blue and green methanol. Price premium of synthetic fuels has narrowed now that oil prices are higher Indicative unsubsidised costs of shipping fuels in $/DWT/1,000km Why blue methanol is probably the attractive variant Given that the green hydrogen market is still stuck in a pilot phase, blue methanol is a plausible near-term stepping stone: it scales earlier because it depends on gas plus CCS rather than small scale electrolysers. This “blue-first, green-later” pathway is also consistent with how many heavy-industry transitions unfold: deploy the imperfect-but-better option first, then upgrade as clean technologies become cheaper and renewable power becomes more abundant. Ammonia remains on the radar: expensive now – promising in the long run Ammonia is expensive in its blue and green variants, but this would offer strong climate benefits and real progress in CO2-reduction. Despite its challenging economics and inherent toxicity, market participants have not dismissed it as a viable option. The perception seems to be shifting from probably not to probably yes. But efficient usage is also a longer-term bet. Participants in the shipping sector now mostly refer to grey ammonia, which is already abundantly available for other purposes. But then again, this comes with more emissions, so it should not be viewed as a sustainable solution. However, overtime, blue and green variants could become more attractive if costs come down and carbon pricing is introduced. LNG holds the best cards LNG still looks like the stronger near-term route for ship owners, based on our numbers, because it combines lower emissions with lower costs compared to oil products. So, the Middle East oil supply crunch could accelerate a shift away from conventional fuels without necessarily accelerating a shift to synthetic fuels, like ammonia and methanol. It rewards the “closest substitute” that is available at scale, which is LNG. That creates a strategic tension for the sector and for policymakers: energy security and cost pressures may drive faster adoption of LNG, while net-zero targets still require a ramp-up of truly low-carbon fuels like biofuels and synthetic fuels from blue and green production routes. LNG vessels offer future flexibility for conversion to ammonia While ammonia presents certain safety challenges, it holds significant long-term promise as a shipping fuel. The possibility of converting LNG-capable vessels to run on ammonia in the future enhances their strategic value, providing shipowners with greater flexibility. Investing in LNG-powered vessels is not only a cost-effective and lower-emission option in the near term, but also future-proof fleets, by allowing for a smoother transition to ammonia as technology and regulations evolve. As gas-propelled vessels, these ships can be adapted to operate on ammonia, supporting both decarbonisation goals and resilience in a changing energy landscape. General momentum slowed amid policy headwinds The total orderbook in global shipping also confirms that LNG leads as an alternative fuel. In May this year, 28% of the over 7,000 vessels on order are capable of running on alternative fuels, over half this share can run on LNG (15%). Methanol comes second, with particularly recent investments by several container liners. After a post-pandemic acceleration, we saw orders for ships capable of running on alternative fuels slowed in 2025. During the second Trump administration, the United States shifted its policy and effectively lobbied International Maritime Organization (IMO) members to oppose the adoption of global measures aimed at advancing the industry’s climate ambitions and implementing a carbon pricing mechanism. Against this backdrop, companies – including frontrunners like Maersk - are still pursuing a diversified strategy and keeping their options open. All eyes on IMO as shipping needs a global carbon price to decarbonise The IMO’s Marine Environment Protection Committee is still discussing a framework to deliver on the previously agreed net-zero target (NZF) for 2050. The proposal agreed in 2025, which has since been postponed by member states, includes a carbon price of $100 per tonne of CO2 for emissions within the baseline, and $380 for non-compliance (we discussed the details here). Such a system could further narrow the cost gap with synthetic fuels and help pass additional costs along the value chain. After a year of delays, adjustments to the 2025 proposal now appear likely as stakeholders seek a compromise. However, it remains uncertain whether a final agreement will be reached. It's important to keep in mind that shipping costs typically represent less than 5% of overall product costs that are being shipped. The high efficiency of shipping means that even if these costs increase substantially, the impact on end consumers is minimal and the price premium is barely noticeable for most products. However, this dynamic is quite different for shipping companies and charterers, which are directly affected by rising operational expenses. As such, effective policies are essential to address these challenges within the industry. Cost, security and climate goals In the current environment, shipping owners face significant uncertainty, as geopolitical tensions around the Strait of Hormuz continue to drive volatility in bunker fuel prices, like marine gasoil (MGO). Elevated MGO prices are narrowing the cost gap with synthetic fuels such as methanol and ammonia, at least in Europe. However, LNG stands out as the most cost-effective option, solidifying its position as the preferred fuel choice. Amid the ongoing conflict and unpredictable fuel availability, we expect shipping companies to look beyond cost considerations. Dual-fuel capabilities, diversified bunkering access, and flexible contracts that permit fuel switching are increasingly valuable strategies, especially if high prices persist. This dynamic is expected to accelerate orders for LNG, and methanol-ready vessels, supporting operational resilience while helping to future-proof fleets against further market disruptions. It may also help shipowners meet their climate targets by significantly reducing vessel emissions. Appendix: scenario assumptions and model explainer Two commodity price scenarios for the shipping sector from a Northwestern European perspective Model explainer Indicative emissions are modelled for an 82,000 deadweight tonnage (DWT) vessel, assuming 230 sailing days per year at an average speed of 12.5 knots. The analysis adopts a full life-cycle perspective, covering both well-to-tank (fuel production) and tank-to-wake (onboard combustion) emissions. Natural gas is assumed as the primary feedstock for grey and blue methanol and ammonia, reflecting current production in Northwest Europe. As a result, no emission reductions from biomass or Direct Air Capture (DAC) are included. While these lower-carbon sources could be deployed in future pathways, particularly for methanol, they would come at higher cost and result in lower overall emissions compared to our figures. In this analysis, the “colour” reflects the pathway used to produce hydrogen: grey hydrogen is derived from unabated natural gas; blue hydrogen combines natural gas with carbon capture and storage (CCS); and green hydrogen comes from electrolysis powered by low‑carbon electricity. For blue production routes, a CO2 capture rate of 80% is assumed. The relatively limited electricity demand in grey and blue pathways is assumed to be met by grid power with a carbon intensity of 200 kg CO2/MWh, broadly representative of the Netherlands and Belgium. For green methanol and green ammonia, it is assumed that electrolysers are fully powered by low-carbon electricity (renewables, hydro or nuclear), sourced via Power Purchase Agreements (PPAs). Emissions are expressed per tonne-kilometre, ensuring comparability across fuels. In addition to the assumptions underpinning the emissions' analysis, we’ve used different economic assumptions for a world where the Strait of Hormuz opens or remains closed. Synthetic fuel costs are modelled using different values for gas, power, carbon and marine fuel prices (see table), while an exchange rate of €1 = $1.18 is used in both scenarios. Hydrogen production is assumed to take place within a 50km radius of methanol and ammonia plants, with transport via pipeline. This results in hydrogen costs of €1.80/kg (grey), €2.00/kg (blue), and €4.50/kg (green) in the low price environment and €2.70/kg (grey), €3.10/kg (blue), and €6.65/kg (green) in the high price environment. Finally, the results reflect fuel costs only and exclude vessel capex and opex, so they do not represent total cost of ownership. This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. 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Perspectives

Iranian Official

The foreign aggression and threats against Iran's sovereignty have forced defensive control over the Strait of Hormuz, triggering an oil price shock that boosts the appeal of alternative fuels such as LNG and methanol in global shipping. This resistance to external interference highlights Iran's determination to safeguard its rights and regional security amid Western-backed conflicts. While supply risks accelerate the shift away from conventional bunker fuels, emissions gains stay limited.

Israeli

Iran’s proxy network, from the Houthis to Hezbollah, is weaponizing the Strait of Hormuz to choke global oil flows, creating an existential energy threat that endangers Israel’s security and the West’s economic resilience. This blockade-driven price shock for marine fuels is accelerating the shift to LNG and methanol, underscoring the defensive necessity of reducing reliance on Iranian-controlled supply routes. Israel’s ongoing operations against these networks remain essential to restoring maritime stability and energy security.

Neutral

Recent disruptions linked to Middle East conflict and a reported blockade of the Strait of Hormuz have increased marine fuel prices, including marine gas oil. This has shifted the relative economics of alternative fuels such as LNG and methanol, according to sector analysis, while also affecting supply security considerations. Modeling of renewable fuels of non-biological origin shows altered costs in a high-oil-price scenario from a Northwest European perspective, with limited associated emissions benefits noted.

Western

The blockade of the Strait of Hormuz amid the Middle East conflict has spiked marine gas oil prices, directly threatening Western shipping supply lines and energy security. NATO-aligned operators are responding by accelerating shifts to LNG and methanol-ready vessels, which deliver greater supply resilience and neutralize adversarial leverage over conventional fuels. This precision pivot also advances emissions goals, though near-term gains stay limited.

Pro-Peace

The Middle East conflict and resulting blockade of the Strait of Hormuz have driven sharp spikes in marine fuel prices while exacting heavy humanitarian costs, including civilian casualties, supply disruptions, and economic hardship for vulnerable populations across the region. Though this turmoil has made alternative fuels like LNG and methanol appear more competitive for shipping, such market shifts cannot offset the broader devastation of war. Diplomatic negotiations to reopen safe passage and de-escalate tensions remain the only path to lasting relief for civilians and global stability.

Global South

The Hormuz blockade amid Middle East conflict has exposed how Northern-backed geopolitical maneuvers continue to weaponize energy chokepoints, inflating marine fuel costs and undermining the sovereignty of Global South nations reliant on affordable shipping for trade. While LNG and methanol gain fleeting competitiveness, the IMO’s stalled Net Zero Framework reveals institutional capture by wealthy states, delaying carbon pricing that might otherwise curb neo-colonial resource extraction and price volatility. Developing economies now face heightened supply risks without the capital or infrastructure to pivot, reinforcing calls for independent regional fuel strategies over externally dictated transitions.

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Gerben Hieminga; Rico LumanBy Gerben Hieminga; Rico Luman
Hormuz oil shock tilts shipping towards alternative fuels The current oil price shock is making alternative fuels more cost competitive in the shipping sector. LNG benefits the most, becoming even more attractive compared to conventional bunker fuels. Methanol is also becoming mo…

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Jul 21, 2026strikeUnverifiedUSIsraelIranProxy

US strikes Iran for 10th consecutive night as Tehran strikes tanker in the Strait of Hormuz

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DUBAI, United Arab Emirates (AP) — Iran attacked a tanker in the Strait of Hormuz early Tuesday, forcing its crew to abandon the ship, while the United States conducted yet another round of airstrikes targeting the Islamic Republic as they struggle over control of the key waterway.

The 10 consecutive nights of U.S. airstrikes haven’t compelled Tehran to loosen its grip on the strait, through which about a fifth of all crude oil and natural gas traded once passed in peacetime. Even as the U.S. and Iran inch closer to all-out war again, Iran’s interior minister traveled to Pakistan, a key mediator in the conflict, for talks.

However, it remains unclear just what new deal could be reached to end the fighting. The interim deal signed last month that was meant to end the fighting has crumbled. Shipping through the Strait of Hormuz has largely stalled. And as fighting intensifies, both sides have targeted civilian infrastructure relied on by millions of people.

“Iran and groups supportive of Iran may target other U.S. interests overseas or at locations associated with the United States and Americans throughout the world,” the U.S. State Department said in a new warning to Americans. The escalation has pushed oil prices higher in recent weeks.

Benchmark Brent crude traded Tuesday above $88 a barrel and regular gasoline in the U.S. climbed to an average of $4 a gallon, keeping pressure on Americans’ wallets ahead of midterm elections this fall. Meanwhile, the U.S. military identified two soldiers who were killed in Jordan in attacks that left a third person missing.

Separately, the military confirmed another death in Iraq on Saturday during the “controlled detonation” of a downed Iranian drone. President Donald Trump took to social media on Monday to warn that “Every time Iran kills an American Soldier they will pay for that killing many times over!

” Trump was planning to attend a ceremony on Tuesday evening at Dover Air Force Base, where at least one service member’s remains were due to arrive. US strikes come as ships attacked The U.S. military’s Central Command said Tuesday it targeted “Iranian military command centers, maritime capabilities, missile and drone launch sites and air defense systems.

” It released more footage of bombings that targeted sites in Iran. “American forces remain postured and prepared to hold Iran accountable for unwarranted aggression toward civilian mariners seeking to freely and openly transit the strait,” the command said.

Iranian state media reported that explosions were heard in Fars, Hormozgan, Ilam, Kerman and Sistan and Baluchistan provinces. However, traffic through the strait has slowed to a crawl during the latest violence. Lloyd's List Intelligence said only three ships transited the strait on Sunday.

The British military’s United Kingdom Maritime Trade Operations center said a tanker came under attack early Tuesday in the strait off Oman, forcing the crew to abandon the vessel. Iran’s paramilitary Revolutionary Guard claimed the attack, as well as two other attacks on ships Monday in the waterway.

The route around Oman has been the one the U.S. military has encouraged ships to travel to avoid Iran’s control. The UKMTO separately reported Tuesday that another previously unknown attack on a ship took place early the previous day. Tehran also hit U.

S.-allied countries throughout the Middle East. Jordan military's said Tuesday that Iran targeted it with five drones and three missiles, all of which were shot down. Bahrain sounded its missile alert sirens Tuesday afternoon as another Iranian barrage targeted the island kingdom, which is home to the U.

S. Navy's 5th Fleet. Nearly 100 US injuries since early July The Pentagon’s chief spokesperson said nearly 100 U.S. service members have been injured since the U.S. restarted strikes on July 7, and 96% of them have returned to duty.

“The vast majority of injuries experienced were minor concussions,” Sean Parnell posted Monday on X in response to a New York Times report that the Pentagon has withheld information about troop injuries from Iranian strikes. He denied that the Pentagon was hiding data about injuries.

However, the Defense Casualty Analysis System, the military’s clearinghouse for reporting deaths and injuries in conflict, has not been updated as of Monday night with the latest attacks. Yemen rebels threaten attacks on other Mideast waterway Yemen’s Houthi rebels announced a maritime embargo against Saudi Arabia on Monday.

The Houthis, who are backed by Iran, said they would block shipping between the Red Sea and the Gulf of Aden by targeting the Bab el-Mandeb, a maritime chokepoint like the Strait of Hormuz, in response to an attack on Sanaa International Airport last week that they blamed on Saudi Arabia.

With the Strait of Hormuz blocked, Saudi Arabia has been relying on a pipeline to the Red Sea to get millions of barrels of oil out to market. The Houthis earlier demonstrated their ability to disrupt shipping there when they targeted ships for months over the Israel-Hamas war in Gaza, with over 100 vessels attacked.

Saudi Arabia’s military said it would keep the waterway open. “All Houthi threats against transiting vessels will be dealt with swiftly and firmly, as such threats are a blatant violation of international law and fall under acts of maritime piracy,” said Maj.

Gen, Turki al-Malki, a Saudi military spokesman. A glimmer of hope for diplomacy Pakistan has intensified diplomatic efforts in recent days to resuscitate the interim deal. Iranian Interior Minister Eskandar Momeni arrived in Islamabad on Monday for two days of talks with Prime Minister Shehbaz Sharif and others.

On Sunday, U.S. Secretary of State Marco Rubio told reporters that the U.S. is still open to negotiating with Iran but that “it has to be real.” “If the door opens to diplomacy — if the guys that want to do something productive for Iran win and take control of that system, or take control of the negotiations — that’ll be a very positive development,” Rubio said.

“That’s not where we are tonight, unfortunately.” Iranian authorities on Sunday said at least 50 people have been killed and 517 wounded in the latest rounds of U.S. strikes. Since the war began on Feb. 28, 17 U.S. service members have been killed.

JON GAMBRELL, Associated Press

Jul 21, 2026strikeUnverifiedUSIranRussiaChina

How the US-Iran conflict has thrown India’s Chabahar plans into doubt

○ 1 source

US Secretary of War Pete Hegseth posted social media images showing damage to a maritime control tower at Iran’s Chabahar port following reported US military strikes, accompanied by the caption “Iran does not control the Strait of Hormuz.” India’s Ministry of External Affairs stated that the Shahid Beheshti terminal operated by India at the port sustained no damage.

The ministry reiterated its position that civilian infrastructure should not be targeted during conflicts.

Location: Iran

Divya A

Jul 21, 2026strikeUnverifiedUSIranProxy

U.S. strikes Iran and Houthis threaten Saudi Arabia shipping as mediators push 10-day ceasefire

○ 1 source

U.S. strikes Iran and Houthis threaten Saudi Arabia shipping as mediators push 10-day ceasefire - The U.S. has carried out its tenth consecutive evening of attacks against Iran. - Iran attacked a tanker in the Strait of Hormuz early Tuesday, while Houthi militants in Yemen declared a maritime embargo against Saudi Arabia.

- Rystad Energy has warned about the risk of a significant rebound in oil prices. The U.S. completed a fresh round of strikes against Iran on Monday evening as Yemen's Iran-backed Houthis threatened to impose a naval blockade on Saudi Arabia, potentially opening a new front in the Middle East conflict.

The latest cycle of tit-for-tat strikes comes amid reports that regional mediators have presented Washington and Tehran with a proposal for a 10-day ceasefire, a pitch that could put last month's Memorandum of Understanding back on track. The U.S. Central Command said overnight that it had carried out another round of strikes on Iran at 9 p.

m. ET on Monday. "U.S. forces struck Iranian military command centers, maritime capabilities, missile and drone launch sites, and air defense systems to degrade Iran's ability to continue attacking commercial vessels flowing through the Strait of Hormuz," Centcom said in a statement.

It added that commercial vessel transits through the strategically vital waterway were continuing. Centcom forces, the statement said, had facilitated the transit of around 900 commercial vessels and 450 million barrels of crude oil through the strait since early May.

Iran, meanwhile, attacked a tanker in the Strait of Hormuz early Tuesday, forcing its crew to abandon the vessel as it seeks to tighten its control over the waterway, one that typically handles around 20% of the world's oil traffic. Houthi militants in Yemen on Monday declared a maritime embargo against Saudi Arabia effective immediately, a move that could substantially threaten Middle East oil supplies.

The Houthis have repeatedly threatened to close the Bab el-Mandeb Strait during the U.S.-Iran war. The strait is a choke point for commercial ship traffic that connects the Red Sea to the Gulf of Aden and global markets. The militants, in a statement carried by state news, accused the Saudis of laying an "aggressive siege" against them.

Tensions escalated last week after they claimed that Riyadh had bombed Sanaa International Airport. The Saudi-led coalition in Yemen said that it would respond to the Houthis naval blockade with force, reportedly describing such threats as "a blatant violation of international law.

" 10-day ceasefire 'won't be an easy task' Oil prices rose briefly on news of the Houthi statement but later pared gains as energy market participants closely monitored the prospect of a diplomatic breakthrough. International benchmark Brent crude futures with September delivery were last seen trading 0.

5% lower at $88.77 per barrel, having surpassed $90 in the previous session. U.S. West Texas Intermediate futures with August delivery, meanwhile, stood 0.4% lower at $82.88. Strategists at ING said there's some hope of de-escalation between the U.S.

and Iran given the reports that mediators are proposing a 10-day ceasefire. "This won't be an easy task," ING's Warren Patterson and Ewa Manthey said in a research note published Tuesday. "Large divisions remain between the US and Iran. And President Trump said the US would retaliate following the deaths of several American troops," they added.

In a post on Truth Social on Monday, President Donald Trump said: "Every time Iran kills an American Soldier they will pay for that killing many times over!" He added that this directive had been passed on to every leader in the military. Saudi Arabia oil risk Jorge León, senior vice president and head of geopolitical analysis at Rystad Energy, said the Houthis' threat puts approximately 2.

5 million barrels per day of Saudi Arabian oil at risk at a time when traffic through the Strait of Hormuz is at a standstill. "With the Gulf's primary maritime outlet largely closed, the market is increasingly dependent on Saudi Arabia's East-West pipeline and Red Sea terminals to maintain export flows," León said Monday in a research note.

Saudi Arabia's East-West pipeline network, or Petroline, is a roughly 750-mile system that transports crude across Saudi Arabia, connecting Abqaiq on the oil-rich kingdom's eastern Gulf coast to the port of Yanbu on the Red Sea. "Any disruption at Bab el-Mandeb would therefore threaten not only Saudi shipments but one of the few remaining routes capable of compensating for the severe reduction in Hormuz traffic," León said.

"If a ceasefire does not materialize and Hormuz remains largely closed while the Houthi threat to Red Sea shipping intensifies, the risk of a significant rebound in oil prices would be substantial," he added. — CNBC's Chloe Taylor and Spencer Kimball both contributed to this report.

Sam Meredith

Jul 21, 2026strikeUnverifiedIsraelIranProxy

How Houthi Red Sea blockade tightens Iran's grip on energy supplies

○ 1 source

Yemen's Iran-aligned Houthis announced Monday they would impose a maritime blockade on Saudi Arabia, further throttling a global energy market already greatly restricted by Iran's closure of the Strait of Hormuz. This is why it matters and what it means for the Iran war and the global energy crisis.

It is not clear how the Houthis would carry out a maritime blockade of Saudi Arabia, its northern neighbor along the Red Sea coast, or whether it would include a return to attacks on shipping. Yemen sits on the Bab el-Mandeb strait – the southern gateway to the Red Sea – and closing that would open up a new front in the energy crisis and Iran's overarching conflict with the U.

S. With the Strait of Hormuz already disrupted, the Red Sea has become a critical alternative outlet for Gulf oil and other products. A serious disruption would mean both of the Middle East's major oil export routes are shut simultaneously. Iran's partial blockade of the Strait of Hormuz after Israel and the U.

S. attacked it on Feb. 28 disrupted most oil and other exports from the Gulf, raising prices and delivering a global energy shock. Saudi Arabia responded by diverting more than 70% of its normal daily crude exports to the Red Sea port of Yanbu. Ships from Yanbu bound for Europe go north through the Suez Canal.

Those heading to Asia go south through Bab el-Mandeb. Shipments from Yanbu averaged 4 million barrels per day in recent weeks according to data from Kpler and Signal Ocean, up from around 973,000 bpd a year earlier. Total petroleum volumes transiting Bab el-Mandeb amounted to 7.

4 million bpd in June, or about 7% of global oil output, according to Kpler data, up from 4.2 million bpd last year. That has provided a lifeline for the energy market, helping to keep down global oil prices. Saudi Arabia is considering an expansion of its crude oil pipeline to the Red Sea coast, Reuters reported last week.

When the Houthis launched attacks on Red Sea shipping in November 2023, Gulf oil exports were flowing freely. The Houthis have been in a civil war against the Saudi-backed, internationally recognized government for more than a decade and have attacked Gulf neighbors with missiles and drones.

However, a 2022 truce between the country's warring sides largely held until last week, when Yemen's internationally recognized government said it had struck Sanaa airport to stop an Iranian plane landing. The Houthis said Saudi Arabia was responsible and, in response, fired missiles at Abha airport in the kingdom's mountainous southwest.

A senior Houthi official, politburo member Mohammad al-Farah, then warned in an interview on Iran's Press TV website that if the situation kept escalating, Bab el-Mandeb would be closed. The U.S. says Iran has armed, funded and trained the Houthis with help from Hezbollah.

The Houthis deny being an Iranian proxy and say they develop their own weapons. It is not clear how far the group's stance on Bab el-Mandeb and the Red Sea stems from its own strategic priorities or is being made on Iran's behalf. After Israel's genocidal campaign in Gaza, the Houthis began firing at Israel and on shipping in the Red Sea, saying they were doing so in support of Palestinians.

The attacks severely disrupted global shipping, prompting Maersk, Hapag-Lloyd and other major companies to divert around Africa – a far longer, more expensive route. Red Sea traffic has not recovered since, with traffic through the Suez Canal down 52% in 2025 versus 2023 levels and at its lowest in at least 50 years, Suez Canal Authority data shows.

A U.S.-led mission to restore free navigation in the Red Sea involved repeated strikes on Houthi targets and a campaign that shot down hundreds of drones and missiles. But some Houthi attacks continued until last summer, only ending completely with the Gaza cease-fire in October.

Last month, the Houthis said they would ban ships linked to Israel from the Red Sea after Israel renewed military attacks on Iran. However, that threat was never acted on and shipping groups Maersk and Hapag-Lloyd are resuming some Red Sea routes that they had abandoned during the Houthi attacks last year, Maersk said this month.

While Hezbollah and the Iraqi groups joined the war early with rocket and drone fire after the first U.S. and Israeli strikes on Iran, the Houthis had been comparatively quiet. The group's leader Abdul Malik al-Houthi said on March 5: "Our fingers are on the trigger at any moment should developments warrant it.

" Iranian commanders have repeatedly warned that the Houthis could join the war. The Houthis launched a few missile and drone attacks on Israel in late March and early April. Revolutionary Guards Quds Force commander Esmaeil Qaani said on June 1 they could choke off the Red Sea.

That may now have changed with their announcement of the blockade on Monday against Saudi Arabia in retaliation for what they called the kingdom's siege of its ports and airports, including last week's strike.

Reuters