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Bob McNally, founder and president of Rapidan Energy Group, warns oil prices could move sharply higher if the conflict around the Strait of Hormuz expands to the Red Sea, warning that the market has largely exhausted the buffers that helped contain the initial shock. McNally says China is beginning to increase crude imports again, the available reserve-release buffer is largely spent and refiners are running at precariously high utilization rates. Responding to President Trump’s assertion that the US does not need the Strait of Hormuz, McNally says that may be true in a physical sense but not in a price sense, because disruptions anywhere in the global oil market raise prices everywhere. He speaks with Joe Mathieu and Kailey Leinz on the late edition of Bloomberg’s “Balance of Power.”
Oil prices rose Thursday to their highest level since early June after the latest Iran war escalation threatened severe new disruption to global supplies.
Brent crude oil, one of two key global benchmarks, rose more than 6% to more than $100 per barrel in early Thursday trading. That is its highest level in eight weeks, since the end of May.
U.S. crude oil also jumped for a second straight day, rising more than 5% to almost $92 per barrel — its highest level since June 11.
The new surge in prices comes after Tehran-backed Houthi rebels claimed attacks on two Saudi oil tankers in the Red Sea, following their announcement of a naval blockade on the kingdom.
The Houthis, an Iranian-aligned militant group in Yemen, said they attacked two vessels to enforce the maritime blockade they announced on Monday against Saudi Arabia.
President Donald Trump said Thursday the United States would hold Iran responsible for further attacks carried out by the Houthis following the targeting of Saudi ships. “Major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves, who I am very disappointed with in that they have, until now, acted very professionally and smart,” he wrote on Truth Social.
Rubio said he hoped the Houthis will de-escalate the situation, which threatens to further spike energy prices amid an already severe energy crunch due to the closure of the Strait of Hormuz.
The apparent attacks off the coast of Saudi Arabia come as the U.S. and Iran battle for control over the Strait of Hormuz. They imperil a second critical shipping route through the Bab el-Mandeb Strait, a narrow channel connecting the Red Sea with the Gulf of Aden, which carries about 7 percent of global oil supply.
