Oil hits $100 as Houthis selectively enforce Red Sea blockade

Oil crossed the $100 threshold on Thursday for the first time since late May, driven by a cascade of supply disruptions that analysts are still working to understand. Brent crude futures jumped $6.58 to settle at $100.65 a barrel, a 6.96 percent surge that rippled through energy markets and gas pumps across the United States, where the national average climbed to $4.09 per gallon.

The immediate trigger was Yemen's Houthi movement, which declared a naval blockade of Saudi Arabian oil shipments and announced they would target tankers linked to Saudi Arabia, Israel, and the United States in the Bab el-Mandeb strait—the narrow corridor that connects the Red Sea to the Indian Ocean and funnels a significant portion of global crude. On Thursday itself, the Houthis attacked two Saudi oil tankers; one was confirmed ablaze, though analysts at the marine tracking firm Windward could not immediately verify whether the second vessel was also struck. The attacks came after Iran closed the Strait of Hormuz in retaliation for American and Israeli military operations, cutting off another major shipping route that Saudi Arabia had been using to move crude.

What makes this blockade unusual, however, is that it appears to be working selectively. The Houthis are not indiscriminately stopping all traffic through the chokepoint. Instead, they seem to be calibrating their enforcement based on who owns or operates the vessel, not what cargo it carries. Two Chinese-owned tankers loaded with Saudi crude passed through the Bab el-Mandeb on July 20 without incident, traveling the same corridor that Western and Saudi-linked operators were being warned to avoid. This pattern suggests the blockade is shaping which companies can move Saudi oil, not whether Saudi oil moves at all.

Michelle Bockmann, a senior maritime intelligence analyst at Windward, noted the unpredictability of Houthi decision-making. "The Houthis are quite mercurial and there is no complete clarity on what the blockade means," she said. The group has historically maintained a relationship with China, relying on the country for drone components and other support, and Chinese vessels have enjoyed what analysts describe as a "free pass" through Red Sea waters—a pattern that held during the 2023-2025 period when Houthis attacked cargo ships aligned with Israel and the United States following the war in Gaza. Bockmann added that the group understands the power of their actions: "No one has ever been able to predict their actions… but they know you don't have to do a lot to get the oil markets to react."

The price spike reflects a broader tightening of global energy supplies. The Strait of Hormuz, through which nearly one-fifth of the world's oil flowed before the current crisis, remains closed. Strategic crude reserves have not been replenished since the earlier peak of the Hormuz disruption. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, characterized the moment as a shift in how smaller nations wield leverage: "The multiple chokepoints are new and an example of littoral states looking to use their leverage."

Diesel markets are experiencing even sharper pressure than crude. The national average for diesel reached $5.34 per gallon, driven partly by damage to Russian refineries from Ukrainian drone strikes. Russia has responded by banning diesel exports, tightening supplies globally. Patrick De Haan, head of petroleum analysis at GasBuddy, expects the current oil price surge could translate to a 10 to 20 cent increase per gallon at American pumps over the coming weeks. But he is watching diesel availability more closely than crude itself, noting that "oil exports are one story, but supplies of diesel gasoline, jet fuel is another story."

China's role adds another layer of uncertainty. The country has historically been a major oil importer but has sharply reduced purchases in recent months, a move that helped stabilize global prices by easing demand pressure. No one anticipated this shift, De Haan said, and it remains unclear whether China is drawing down its strategic reserves or simply pausing imports. If Chinese demand returns to historical levels, prices could climb further. Meanwhile, hurricane season in the United States looms as another potential disruption to refining capacity. The convergence of these factors—the Red Sea blockade, the Hormuz closure, Russian refinery damage, and the mystery of Chinese demand—has created what analysts describe as a compounding series of supply shocks with no clear resolution in sight.