Oil Prices Surge Past $91 on Middle East Escalation, Houthi Threats

Oil prices surged on Tuesday, with Brent crude closing above $91 per barrel, driven by escalating conflict in the Middle East and new threats to key shipping routes. According to live price data, West Texas Intermediate (WTI) crude was at $84.31, up $1.83 or 2.22%, while Brent crude traded at $91.15, a gain of $1.93. The Bakken crude differential narrowed to a discount of $3.42 per barrel versus WTI.

The primary driver of the rally is the expansion of regional conflict into the Red Sea, according to reports from OilPrice.com. Yemen's Houthi rebels have issued warnings to global shipping companies against loading cargo at Saudi ports, threatening strikes. This has forced tankers to reroute, raising fears of prolonged supply disruptions. The report notes that the first Asian-chartered tankers carrying Saudi oil are already making U-turns to avoid the threat.

Compounding supply concerns, Saudi Aramco reportedly shipped a record 5.9 million barrels per day from its Red Sea port of Yanbu in the week to July 17. This activity, described as flooding the port ahead of a potential escalation, highlights the critical vulnerability of this infrastructure chokepoint for evacuating Saudi crude.

The price surge is also flagged as a significant economic risk. According to a separate OilPrice.com report, the International Monetary Fund (IMF) has cited higher oil prices due to the re-escalation of the Middle East war as a key downside risk to India's GDP growth. The IMF recently cut its growth forecast for India's 2026/2027 fiscal year to 6.4%, partly due to higher energy prices. India, which imports over 85% of its oil, is scrambling to diversify supplies away from the Middle East.

For Bakken operators, the rising global benchmark prices are a positive signal, strengthening the revenue environment for North Dakota production. The relatively narrow Bakken differential of -$3.42 indicates strong demand for the light sweet crude, with logistical constraints to the Gulf Coast likely factored in. The geopolitical premium supports cash flows at a time when operational efficiency remains paramount in the basin.

The broader market context includes the collapse of a U.S.-Iran ceasefire and the renewed closure of the Strait of Hormuz, which OilPrice.com reports had previously hiked oil prices by 16% in one week. The combination of disruptions at both the Strait of Hormuz and now the Red Sea creates a "double risk premium" for global oil markets.

Natural gas prices saw a modest increase, with the benchmark trading at $2.88, up $0.02 on the day.