Middle East escalation triggers oil price surge above $100 a barrel

Tehran: The United States launched fresh strikes on Iran Friday after Tehran-backed Houthi rebels attacked oil tankers in the Red Sea, marking an escalation that pushed crude prices past $100 a barrel.

The US military insisted that the Strait of Hormuz — through which one fifth of the world’s oil passed before the war — was “open for transit” after Iran pressed on with attacks on tankers using the route in a bid to strongarm them into paying for safe passage.

But the Houthis opened a new front in the war this week when they attacked vessels in the Red Sea, intensifying fears over world crude supplies.

The international oil benchmark Brent crude surged past $100 a barrel on Thursday for the first time since May, up eight percent, as world leaders expressed alarm over the rebels’ attacks.

It was hovering just above $100 on Friday morning.

President Donald Trump has vowed to use frozen Iranian assets to pay for any damage to shipping, a move Tehran warned would set an “incendiary precedent”.

The warning came as the US military said it had completed its thirteenth night in a row of attacks on Iranian military targets to “hold Iran accountable and diminish threats from the Islamic Revolutionary Guard Corps to commercial shipping”.

Iranian state media reported that US missiles hit the southwestern city of Ahvaz, and explosions were heard in nearby Omidiyeh, as well as the port city of Bandar Abbas and the island of Qeshm on the Strait of Hormuz.

– ‘Out of control’ –

Trump said the United States would hold Iran responsible for the Houthis’ actions and warned both would soon receive a “major military punishment”.

United Nations Secretary-General Antonio Guterres warned against further escalation.

“The situation is getting out of control. It is teetering on the edge of the unimaginable,” he told a meeting of the UN Security Council.

“One crisis feeds another. One escalation triggers the next.”

US vows to punish Iran after Houthis strike tankers

European Central Bank President Christine Lagarde warned “the energy shock could intensify further” and push up inflation, feeding speculation about a September eurozone interest rate hike.

German Defence Minister Boris Pistorius warned of “dire consequences” for oil-importing economies and said “nothing — absolutely nothing — suggests that a ceasefire, let alone peace, could be reached”.

The war resumed this month after a ceasefire that had lasted just a few weeks, throwing the region back into chaos as Iran and the United States battled for control of the Strait of Hormuz.

Yemen’s Houthis joined the conflict this week, declaring a blockade of Saudi ports and claiming attacks on tankers.

“The armed forces’ retaliatory attacks will continue as long as the US attacks on the country’s infrastructure and coastal areas continue,” Iran’s army spokesperson Mohammad Akraminia said, according to state television.

US allies Jordan and Kuwait reported intercepting strikes as Iran’s military and Revolutionary Guards claimed to be targeting American assets in both countries.

– Houthis step in –

While Trump has returned to war and his fierce rhetoric, the conflict is proving increasingly unpopular at home.

With midterm elections looming in November, the US House of Representatives passed a symbolic vote, backed by opposition Democrats and a handful of Republicans, calling for the president to halt the war.

Kuwait, meanwhile, reported a drone attack against one of its border posts with Iraq, and said later that its air defences were “intercepting hostile missile and drone attacks following the wrongful Iranian aggression”.

The Houthis said Wednesday they had carried out missile and drone strikes on two Saudi tankers in the Red Sea, the Encelia and the Layla, with Riyadh confirming a vessel had been hit.

The new threat in the Red Sea endangers top oil producer Riyadh’s ability to bypass the strait for some crude exports.

On the sidelines of a Southeast Asian summit in Manila, US Secretary of State Marco Rubio said the Houthis had been “suckered” into attacking Red Sea shipping by Iran.

“The Houthis largely were smart and stayed out of all this throughout the conflict, but they now apparently have gotten themselves suckered into this, going after Saudi Arabia and their ships,” Rubio said.

Oman, a key mediator in the longstanding war between the Houthis and Saudi Arabia, said it was working to resume talks between the two sides, as it voiced “great concern” at the situation in the Red Sea.