Overview
- Renewed Houthi missile and drone strikes and a separate attack that knocked out Saudi Arabia’s East–West pipeline have sharply reduced flows through the Red Sea and routes that bypass the Strait of Hormuz, tightening global crude supplies.
- The pipeline outage, which Riyadh says could remove roughly 4% of global oil capacity, has forced shipments to rely on limited storage at Red Sea ports and cut tanker transits through Hormuz and the Bab el‑Mandeb choke points.
- Brent and WTI have climbed above $100 a barrel with Brent trading around $106–107 and U.S. diesel prices at record highs, a squeeze that company chiefs say has drained commercial stocks and exhausted strategic reserve options.
- Markets have reacted by lifting benchmark U.S. 10‑year Treasury yields toward 5%, strengthening the dollar, pressuring stocks, and sending traders to price a near‑certain 25 basis‑point Fed hike at the coming meeting.
- If the disruption persists, higher energy costs could feed into broader inflation, raise borrowing and refinancing costs for households and firms, and make monetary policy harder to manage without a supply resolution.