Iran-Backed Houthi Strikes on Saudi Arabia Lift Oil to $111

Yemen’s Iran-backed Houthis claimed fresh attacks on Saudi energy, airport and military targets on Monday. Markets reacted on Tuesday. Brent crude reached $111.30 a barrel by 2.27pm UAE time, up 1.52 per cent and at its highest level since mid-May. West Texas Intermediate, the US benchmark, climbed 2.30 per cent to $100.80.

The claims followed an earlier Houthi announcement of six attacks on the kingdom. Monday’s list named King Khalid International Airport in Riyadh, a military airbase near Abha International Airport, a naval task-force camp and a Saudi radar in Bir Askar. The claims raised regional tensions and weighed on Gulf stock markets.

The Security Picture

The targets weren’t random. Airports, airbases, radar installations and energy facilities are infrastructure a state needs to defend itself and keep its economy running. The Houthis, a proxy force backed by Iran, are going after all of it at once.

The impact extends well beyond the Arabian Peninsula. Before the war, the Strait of Hormuz handled a fifth of the world’s energy exports. Movement through the strait remains under pressure. Gulf oil producers have pushed tanker transfers as far as India’s coast and cut prices to keep crude flowing to Asia, while congestion and persistent attacks have strained the makeshift export network around the strait. The US-Iran conflict has also constrained crude supplies from the Middle East, prompting efforts to maintain global supplies.

Brent touched $110 on Friday, its first time at that level since May. WTI topped $100 for the first time in a month. Brent serves as the benchmark for about two thirds of the world’s oil, so its price reaches fuel bills far from the Gulf.

The Economic Fallout

Diesel is feeling the impact hardest. Wholesale diesel surpassed $200 per gallon in Singapore and reached roughly $220 in Europe and the United States, the Paris-based International Energy Agency said last week. The agency agreed to release more than 20 million barrels of diesel to the market.

Higher energy costs are stoking inflation worries. Analysts widely expect the US Federal Reserve to raise interest rates for a second consecutive time at its meeting next week. Duncan Oil analysts said: “Brent crude hovering near five-month highs following geopolitical tensions in the Middle East has reignited fears of sticky inflation.” They added: “Surging energy costs have led investors to believe the Fed will keep interest rates higher for longer to tame inflation.”

Sanctions and the Shadow Fleet

Washington is considering a limited loosening. US Energy Secretary Chris Wright said Monday that the United States was willing to let sanctioned oil tankers begin a process to ship crude legitimately.

The practical effect looks small. Analytics firm Kpler said easing sanctions on the shadow fleet would do little to change record freight rates. As of Monday, it estimated, only 24 of nearly 160 vessels sanctioned by the Treasury Department’s Office of Foreign Assets Control could return to mainstream trade, once their age and ownership restrictions were taken into account. Sanctions relief on that scale doesn’t offset attacks on production, shipping lanes and ports.

Why This Matters: The Houthis’ claimed strikes on Saudi airports, airbases and radar sites show how an Iranian-backed militia can export instability far beyond its home territory. Consumers in Singapore, Europe and the United States are paying through diesel prices above $200 per gallon and the prospect of higher interest rates. Policy tools now in play—from emergency diesel releases to partial sanctions easing—treat the symptoms. They don’t deter the attackers. Gulf states and their partners face a hard question: how much pressure on proxy forces is needed before shipping lanes and energy infrastructure are secure again? It’s a security question first, and markets are pricing it in daily.