Brent Crude Holds Near $100 as Red Sea Supply Risks Escalate

Key Takeaways

• Brent crude traded near $100 a barrel, while WTI remained above $91 after a sharp rally.
• Oil prices are set for strong weekly gains due to attacks on Saudi tankers raising concerns about Red Sea supply routes.
• Restricted traffic through the Strait of Hormuz and disrupted exports from Kazakhstan have added to global supply uncertainty.

Oil Markets Pause After a Sharp Weekly Rally

On July 24, oil prices edged lower but remained close to multi-week highs as escalating tensions in the Middle East continued to support the market. Brent crude futures were trading at approximately $100.02 per barrel, down around 0.7% from the previous close, while US West Texas Intermediate (WTI) crude was near $91.39 per barrel, falling approximately 0.9%. Despite this modest pullback, Brent was on course for a weekly rise of about 14.6%, marking its fourth consecutive weekly advance, while WTI was heading for an increase of approximately 11.8%.

The latest price action suggests that some traders are taking profits following a dramatic rally, but geopolitical risks remain elevated enough to keep both benchmarks well above their levels from the beginning of July.

Red Sea Tanker Attacks Threaten Saudi Oil Exports

The increase in oil prices followed reported attacks on two Saudi oil tankers in the Red Sea, attributed to the Iran-aligned Houthi movement, which announced a naval blockade against Saudi Arabia. One tanker was reportedly set on fire, raising concerns about the security of crude shipments in the region. The Bab el-Mandeb Strait, connecting the Red Sea with the Indian Ocean, has become increasingly important for Saudi exports, with approximately 2.5 million barrels per day of Saudi crude moving through this route. Any sustained disruption could force tankers to take longer routes, significantly increasing journey times and costs.

Strait of Hormuz Traffic Falls to a Trickle

The Strait of Hormuz, a critical energy corridor, has seen a sharp decline in tanker traffic amid renewed US-Iran conflict, with only one tanker crossing the strait on Thursday, the lowest number since May 7. Although Gulf producers have attempted to use alternative pipelines, these routes cannot fully replace the capacity of Hormuz. The combination of restricted traffic and growing security threats around Bab el-Mandeb means that both eastern and western export routes for Gulf oil are under pressure, increasing the geopolitical risk premium in oil prices.

Kazakhstan Disruption Adds to Supply Concerns

Oil markets are also monitoring reduced production in Kazakhstan following suspected drone attacks near the country’s main Black Sea export terminal. The Caspian Pipeline Consortium suspended loadings, affecting approximately 2% of global daily crude supply. Although the impact of this disruption would typically be limited, it is compounded by existing supply concerns in the Gulf and Red Sea.

What Could Move Oil Prices Next?

The immediate focus is whether Brent can maintain its position above the psychologically important $100 level. Further attacks on tankers or a sustained blockade could renew upward pressure on prices. Conversely, evidence of diplomatic progress or safer shipping routes could quickly reduce the geopolitical premium. Traders are also watching refinery activity, as high crude prices may lead refiners to reduce processing rates, tightening supplies of diesel, petrol, and jet fuel.

As of July 24, the overall oil-market picture remains volatile, with Brent trading close to $100 and WTI above $91. Developments in the Strait of Hormuz and Bab el-Mandeb are likely to remain the main drivers of short-term price movements.