Brent Crude Surges Above $100: The Dual-Chokepoint Crisis in the Red Sea and Strait of Hormuz

The Houthis had declared a naval blockade on Saudi Arabia on July 21, and the July 23 strikes were the first reported enforcement action under that declaration .

The Dual-Chokepoint Mechanism

• Strait of Hormuz — already largely closed. Before the Houthi attacks, the US-Iran conflict had reduced Persian Gulf oil flows through the Strait of Hormuz to below 45% of pre-war levels, effectively "near-halting" trade through the world's most important oil chokepoint . Goldman Sachs analysts estimated that pre-war flows through Hormuz had been slashed to below 45% of normal levels .

• Bab el-Mandeb / Red Sea — now under threat. The Houthi tanker strikes threatened the Bab el-Mandeb Strait, the southern entrance to the Red Sea and the alternative maritime route for oil shipments that had been diverted away from Hormuz . With both chokepoints under threat, the market priced in a scenario in which no viable maritime route remained for Middle Eastern crude exports.

• The dual-closure eliminated the fallback routing: crude that had been rerouted via the Red Sea to avoid Hormuz was now itself at risk, creating a "squeeze" on global supply . India, which depends on the Bab el-Mandeb for more than 50% of its crude imports, saw its equity markets fall in early Friday trading as the shock spread .

The attacks effectively broke the reroute trade that had been a safety valve during the Hormuz disruptions, removing the last practical maritime route for Saudi exports .

Why Prices Retreated on July 24

On July 24–25, Houthi rebels signaled they would not completely block ship traffic through the Bab el-Mandeb Strait, walking back the prospect of a full Red Sea closure . Houthi spokesman and chief negotiator Mohammed Abdulsalam stressed that "ship traffic through the strategic Bab el-Mandeb Strait has not been blocked" and that "there will be no full closure, as some have suggested" . This de-escalation signal triggered a sharp reversal:

• Brent fell roughly 4% on Friday, July 24, settling near $97 per barrel — its biggest one-day drop since late June .
• Oil was still observed traversing Middle East trade routes despite the escalation, which further eased panic pricing .
• Two Chinese supertankers carrying a combined 4 million barrels of Saudi Arabian oil managed to exit the Red Sea via the Bab el-Mandeb Strait on Thursday, demonstrating that the route remained partially open .

The New York Times reported prices "remained close to $100" rather than decisively above it, as Iran also dismissed a US cease-fire proposal that same day .

Analyst Projections for Further Upside Risk

Key caveat: Goldman's base case remains $80 per barrel; the $120+ scenario is not their central forecast but their "risk scenario" . Barclays explicitly said risks are "skewed higher depending on how long the impasse lasts" . Goldman's base case assumes de-escalation in the Middle East, with Brent at $80 in Q4 2026 and $75 in 2027 .

The market remains acutely sensitive to any further escalation — or de-escalation — on either chokepoint. The events of late July 2026 demonstrated how quickly a second chokepoint threat can transform a supply disruption into a full-blown global oil shock.