Oil markets were headed for notable weekly gains on July 24 after developments that tightened perceptions of global supply security. Attacks on tankers in the Red Sea by Iran-aligned Houthi forces and a temporary production pullback in Kazakhstan following the closure of its principal export route both contributed to the advance.
As of 0126 GMT, Brent futures had declined 72 cents, or 0.72%, to $99.97 a barrel, yet were positioned for a 13.5% rise over the week. West Texas Intermediate (WTI) futures fell 70 cents, or 0.76%, to $91.49 a barrel, leaving WTI on track for a 10.9% weekly increase.
The previous session had seen larger moves higher. Brent settled up 7% and WTI rose 6.2% on Thursday, marking the first time since May that Brent settled above $100 after Iran-aligned Houthis reported striking two Saudi oil tankers in the Red Sea. Those strikes heightened fears that the Bab el-Mandeb - the passage that links the Red Sea to the Indian Ocean and ranks as the world’s second most important oil channel after the Strait of Hormuz - could be closed.
The potential closure of that chokepoint is central to current market anxiety. Supply routed through the Bab el-Mandeb provides a critical corridor for shipments that otherwise would need longer, alternative routes. Commenting on the overall state of shipping lanes and energy flows, IG market analyst Tony Sycamore said in a note: "The noose around global energy supply routes is pulling tighter again."
Political statements have underscored the tensions. U.S. President Donald Trump said he would "hold Iran responsible" for any further attacks. The Iran-aligned Houthis had announced on Monday they were imposing a naval blockade on Saudi Arabia. Saudi efforts to divert oil via pipeline had been a response to Iran’s closure of the Strait of Hormuz; the Houthis have indicated they could target the Bab el-Mandeb in response to continued U.S. attacks on Iranian power infrastructure after an interim truce broke down two weeks earlier.
Compounding the Red Sea disruptions, Kazakhstan’s energy ministry reported that oil companies temporarily reduced production after suspected Ukrainian drone strikes forced the country’s main Black Sea export terminal to close. Industry sources had said the Caspian Pipeline Consortium stopped receiving oil from Kazakhstan after suspending loadings because of attacks on tankers at the terminal.
The pipeline route affected by the halt handles about 2% of the world’s daily crude supply. Kazakhstan’s energy ministry did not provide figures on the scale of the production reductions, though one source cited in industry reporting said the country’s largest field had cut output by more than half.
Market participants cited the convergence of these events - attacks affecting a major transit lane and an outage in a producing country’s export infrastructure - as the principal drivers behind the recent gains in oil prices and the heightened volatility seen this week.
Note: This article reports the developments and figures as provided; where official sources did not quantify reductions, those limitations are reflected in the coverage.