Mideast oil producers step up plans to bypass the Strait of Hormuz

At least one Saudi oil tanker has been attacked in the Red Sea, widening the risks to energy supplies already disrupted by a near-halt to shipping in the Strait of Hormuz. The price of Brent Crude, the international benchmark, rose 5 percent to over $US98 a barrel as the violence raised fears of greater supply disruptions.

The Houthis, an Iran-aligned militant group in Yemen, said it attacked two vessels to enforce the maritime blockade it announced on Monday against Saudi Arabia. Secretary of State Marco Rubio told reporters in the Philippines on Thursday that the Houthis were making a mistake by menacing shipping in the Red Sea and joining the fighting in the Middle East on behalf of Iran.

“I hope that they’ll stop,” Mr Rubio said. “They got suckered into this by the Iranians.” The Houthis had largely stayed out of the US-Israel war on Iran during the opening months of the conflict, and Mr Rubio said they had been “smart” to do so. Mr Rubio said that one of the ships struck had actually been “flagged Chinese,” which risked angering another major world power.

Mr Rubio said he hoped the Houthis will de-escalate the situation, which threatens to further spike energy prices amid an already severe energy crunch due to the closure of the Strait of Hormuz. The apparent attacks off the coast of Saudi Arabia come as the US and Iran battle for control over the Strait of Hormuz.

They imperil a second critical shipping route through the Bab el-Mandeb Strait, a narrow channel connecting the Red Sea with the Gulf of Aden, which carries around 7 per cent of global oil supply. The scope of the Houthi blockade remains unclear. Even before Wednesday’s attacks, several vessels had already reversed course following the announcement of the Houthi blockade, according to ship-tracking data and analysis.

A statement issued by the Houthis identified the tankers as the Encelia and the Layla, which are listed as Saudi vessels by Kpler, a maritime monitoring agency. The Saudi news agency and a British monitoring group reported Thursday that one vessel had been struck, but did not confirm who carried out the attack.

A second attack has not been corroborated by maritime monitoring agencies. The targeting of the Encelia resulted in a fire at the bow of the ship, but all crew members remained safe, Saudi Arabia’s press agency reported, citing the country’s Transport General Authority.

The UK Maritime Trade Operations - a monitoring agency that is part of Britain’s royal navy - reported an attack on a tanker off the coast of Al Shuqaiq, Saudi Arabia, with a ship struck by an “unknown projectile” causing a fire on board. It did not disclose the identity of the vessel.

The Encelia departed the Saudi Arabia’s Yanbu port on Monday and sailed south through the Red Sea, according to ship tracking data. After a short stop near Jeddah on Tuesday, the vessel continued southward toward the Bab el-Mandeb Strait. At around 10pm local time on Wednesday, around 800km into its voyage, the vessel appeared to make a sudden alteration of its course near Saudi Arabia’s Farasan islands.

Your cookie settings are preventing this third party content from displaying. If you’d like to view this content, please adjust your . To find out more about how we use cookies, please see our Cookie Guide. Just over an hour later, ship tracking data shows the vessel’s navigational status changed to “not under command,” signaling an emergency or breakdown.

The vessel then appeared to come to a halt around 100 miles from Yemen’s shores. Maritime intelligence agency Lloyd’s List said in a research note Thursday the attacks on Layla are yet to be corroborated, but a “double blockade” on the Strait of Hormuz and the Red Sea could see Asian oil importers suffer as they are highly dependent on Middle East crude oil and derivative products.

The Strait of Hormuz saw around 20 per cent of oil and gas supplies flow through before the US and Israel launched joint strikes against Iran in February. It has been largely shut by Iranian attacks on commercial ships and mines in the five-month war.

Overnight, the two sides continued to exchange strikes for the 12th day following the collapse of a preliminary peace agreement signed in June. The economic insecurity brought on by the Iran war has dominated this year’s annual gathering of Southeast Asian nations known as ASEAN.

At the start of the gathering, foreign ministers representing the bloc issued a statement saying they were “deeply concerned” about the impact of blockades of key maritime trade routes in the Middle East. Southeast Asian nations have been especially vulnerable to energy shortages caused by the Iran war.

The strategic region is important to major powers including China, Russia and the United States, which all sent their top diplomats to the meeting. Mr Rubio expressed sympathy for the impact the war was having on Iran but accused Tehran of breaking the US-Iran memorandum of understanding designed to open the strait.

He said the US nevertheless remain open to a diplomatic solution. Get the latest news from thewest.com.au in your inbox.

Oil prices rose Thursday to their highest level since early June after the latest Iran war escalation threatened severe new disruption to global supplies. Brent crude oil, one of two key global benchmarks, rose more than 5% to nearly $99 per barrel in early Thursday trading.

That is its highest level in seven weeks, since June 3. U.S. crude oil also jumped for a second straight day, rising more than 4% to almost $91 per barrel and its highest since June 11. The new surge in prices comes after the Tehran-backed Houthi rebels claimed attacks on two Saudi oil tankers in the Red Sea, following their announcement of a naval blockade on the kingdom.

It appeared to mark the first time since the Iran war began that ship attacks had spread beyond the vicinity of the Strait of Hormuz, opening up a new front in the volatile conflict. The Houthi threat is so unsettling to oil markets because millions of barrels per day pass through the Bab el-Mandeb Strait in order to reach global markets.

About 12% to 15% of global maritime trade worth more than $1 trillion transits the waterway every year. It has also served as an alternative to the Strait of Hormuz, where traffic remains largely at a standstill with ship crossings there falling to single digits on Tuesday.

Since the start of the month, oil prices have now risen about 35%. Those prices are now higher by more than 60% since the start of the year. Along with oil prices, gas prices have risen too. The national average price on Thursday rose to $4.09 per gallon, up from $4.

06 on Wednesday, according to AAA data tracked by NBC News. This has erased much of the progress toward lower prices that came after the U.S. and Iran signed a memorandum of understanding in mid-June. That deal has now collapsed, with President Donald Trump threatening on Wednesday to blow up an Iranian bridge or power plant for every vessel attacked by Tehran.

Then, hours later, came the Houthi claim to have hit two tankers in the Red Sea. The U.K.’s Maritime Trade Office reported a tanker “being struck by an unknown projectile” north of the critical Bab el-Mandeb Strait in the area. And the state-run Saudi Press Agency reported the Encelia was set ablaze by an attack while sailing overnight in the Red Sea, citing an unidentified source from the General Authority of Transport.

It did not mention the Layla. “Inflation has remained top of the agenda for markets this morning,” said Deutsche Bank’s global head of macro research Jim Reid, citing the jump higher in Brent oil. “Indeed, the strikes between the US and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening.

” That worry about inflation as a result of higher oil and gas prices has driven bond yields higher this week as a result. Early on Thursday, the U.S. 10-year Treasury bond was trading at 4.67%, its highest level since January 2025. That 10-year bond has a heavy hand in steering consumer borrowing rates.

On Wednesday, the average 30-year U.S. mortgage rate rose to 6.77%, its highest level since July 2025.

Yemen’s Houthi rebels have declared a blockade on Saudi Arabia, potentially widening the Iran war and further disrupting global trade. They claim to have closed the Bab el-Mandeb Strait to Saudi-linked shipping in retaliation for a Saudi blockade on Yemen and a recent attack on the airport in Yemen’s rebel-held capital.

On Thursday, they said they attacked two Saudi oil tankers in the Red Sea. The strait is a vital shipping chokepoint, with around 12% of global trade passing through. Houthi attacks on shipping would risk reigniting the war with Saudi Arabia, which has diverted millions of barrels of oil exports to the Red Sea as the Iran war has largely closed the Strait of Hormuz.

Yemen’s Houthis stated on Thursday that they had struck two Saudi oil tankers in the Red Sea after declaring a naval blockade earlier in the week, with global oil prices subsequently rising above $98 per barrel. Iranian authorities reported firing four missiles toward Jordan on Thursday, three of which were intercepted, while also stating that US strikes at an Iraq border crossing had killed two people; US Secretary of State Marco Rubio and Iranian officials exchanged statements referencing reciprocal policies, and US President Trump indicated that infrastructure targets would be struck in response to attacks on shipping in the Strait of Hormuz.

The UK Foreign Office advised against non-essential travel to Kuwait and Bahrain citing regional instability and temporarily withdrew staff from Iran, while reports indicated that insurers were considering cancellation of policies for vessels paying tolls to Iran.