Fresh warnings from Iran and renewed U.S. military action are raising fears of wider disruptions to global energy supplies and shipping routes.
Tensions between the United States and Iran climbed another level on Wednesday after Iran warned it could target additional key shipping routes following the closure of the Strait of Hormuz. The latest developments have pushed oil prices higher as traders brace for further supply disruptions.
KEY DETAILS
Iran's Islamic Revolutionary Guard Corps (IRGC) said "all other export corridors that benefit the U.S. and its allies" could also face disruption, arguing that regional energy exports should either be available to everyone or no one.
Analysts say Iran may rely on its Houthi allies in Yemen to threaten the Bab el-Mandeb Strait, a critical route connecting the Red Sea and the Gulf of Aden. The passage handles Saudi oil exports and a large share of global shipping.
A senior Houthi official warned earlier this week that closing the Bab el-Mandeb could send oil prices as high as $200 per barrel if Saudi Arabia continues military action in Yemen.
The warning came after the U.S. launched a new wave of strikes targeting Iranian military sites near the Strait of Hormuz. According to U.S. Central Command, the seven-hour operation hit dozens of military targets after Washington accused Iran of attacking seven commercial ships over the past week, leaving nearly a dozen crew members dead, injured, or missing.
Meanwhile, President Donald Trump warned that the U.S. could strike Iran's power plants and bridges next week unless Tehran returns to negotiations.
MARKET REACTION
Oil prices extended gains after rising 2% on Tuesday to a one-month high. Brent crude reached its highest level since June 12, while West Texas Intermediate (WTI) climbed to its strongest level since June 15, with both benchmarks moving higher again in early Wednesday trading.
WHY IT MATTERS
The Strait of Hormuz and Bab el-Mandeb are two of the world's most important energy chokepoints. Any prolonged disruption could tighten oil supplies, increase shipping costs, and fuel volatility across commodity, currency, and equity markets.
Markets will closely watch whether military action expands further, if Iran follows through on its threats against additional shipping routes, and whether diplomatic talks can prevent a broader regional conflict.
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Source: Reuters
Time: 11:00 AM EEST
