The price of oil crossed $100 a barrel on 23 July 2026, jumping more than 6% in one day. It was the first time oil hit that price since May 2026. The jump came after two things happened at once: a group in Yemen called the Houthis said they attacked two Saudi oil tankers in the Red Sea, and Iran said it had fully closed off a key shipping route called the Strait of Hormuz.

The Strait of Hormuz is a narrow waterway between Iran and Oman. A huge share of the world's oil travels through it. When someone says they've closed it, the oil market pays attention.

The Houthis said they attacked the tankers Encelia and Layla using missiles and drones. Their statement went out through SABA, the Houthi-run news agency. A Saudi news agency confirmed that one of the tankers was on fire after the attack in the Red Sea. All crew members on both ships were reported safe. The Houthis said they targeted the tankers because they violated the group's earlier blockade on Saudi shipments. Al Jazeera reported the Houthi claim directly, though the article did not name any specific Houthi official.

The strikes did not come out of nowhere. On 21 July 2026, Reuters reported that two tankers carrying Saudi oil turned around in the Red Sea after a Houthi warning. The next day, more ships were shown changing course in the same area. Asian oil buyers started looking at the Suez Canal as another way to move Saudi oil. Saudi Arabia condemned the Houthi blockade, warning it could affect oil deliveries to countries that buy Saudi crude. (The Hill)

There are two separate problems happening at the same time, and both are pushing oil prices up. The first is the Red Sea disruption. The second is the Strait of Hormuz.

A ceasefire between Iran and the United States, agreed in mid-June 2026, had mostly fallen apart. Fighting started again around the strait. As of 23 July 2026, the US military had launched strikes on targets in Iran for the 12th night in a row. Iran's Revolutionary Guard — a powerful branch of Iran's military — declared the strait "completely closed" and warned that no tanker could enter or leave without Iran's coordination.

US President Donald Trump threatened "major military punishment" against the Houthis if they keep attacking ships. That adds a second possible area of US military action on top of the existing campaign against Iran.

The market reacted quickly. Goldman Sachs estimated that oil could go above $120 a barrel by late 2026 and average $100 in 2027 if the Strait of Hormuz stays disrupted. Susannah Streeter, an investment strategist at Wealth Club, was cited in coverage describing the wider risks facing energy markets. (Reuters)

Think of these shipping routes like toll highways for oil. When one is blocked, traffic can reroute, but it takes longer and costs more. When two are blocked at the same time, the problem doubles. Ships can go around Africa instead, but that adds days and expense, and it only works if at least one major route is still open.

The Houthi blockade on Saudi shipments, if it holds, would push Saudi oil onto longer routes even if the Gulf waterways calm down. The Suez Canal that Asian buyers are exploring helps, but only partially. It can only handle so much traffic, and it doesn't fix the Hormuz closure for other oil producers in the Gulf.

The bigger picture is that diplomacy is running low on options. The mid-June ceasefire is in tatters. Twelve straight nights of US strikes on Iran, plus Iran's hardline stance on Hormuz, suggest neither side is focused on stepping back. If Trump follows through on his threat against the Houthis, that would open a third area of direct US military action in the region, which could pull in more players and further disrupt shipping.

Here is the key difference to watch. The Red Sea strikes target Saudi oil specifically. A blockade on one country's shipments is, in theory, a narrower problem. A declared closure of the Strait of Hormuz by Iran is a system-wide shock that affects global supply. So far, the verified record does not show actual tanker seizures or attacks in the strait itself. There is the claim of closure and the broader return of fighting between the US and Iran.

Oil prices have gone up for five days in a row. The jump above $100 reflects the market pricing in a worst-case scenario: both shipping routes staying blocked through the rest of 2026. If either route stabilizes, prices could come back down. If both get worse, that Goldman Sachs estimate of $120 could turn out to be low.