Oil Climbs Toward $86 as Iran Threatens a Second Chokepoint
Brent crude rose around 2% on Friday to roughly $86 a barrel, its highest in weeks, after the strike on Kuwait’s power plant and the widening US campaign, with tanker traffic through the Strait of Hormuz at a two-month low. Adding to the alarm, Tehran was reported to have told Yemen’s Houthis to close the Bab el-Mandeb Strait — a second vital chokepoint for global shipping — if its power infrastructure is struck. Together the two straits carry a large share of the world’s seaborne oil.
The threat to Bab el-Mandeb is the escalation the oil market fears most: a war confined to Hormuz is dangerous enough, but drawing in the Houthis to close the strait at the mouth of the Red Sea would put a second of the world’s critical chokepoints in play, squeezing the route to the Suez Canal and forcing yet more shipping onto the long haul around Africa. That Brent has climbed to around $86 rather than spiking far higher suggests the market still treats the second-chokepoint threat as conditional, but the risk premium is building with every widening of the war. For Britain the transmission is quick, through petrol, diesel and the gas price that sets energy bills, and a sustained shock would feed straight into the inflation the incoming government has promised to tackle. Watch whether the Houthis act, the daily transit counts through both straits, and where the oil price settles into next week.