Oil’s retreat in the second half of 2026 was supposed to become easier as hope emerged of flows restoring through the Strait of Hormuz. Instead, the Middle East has just acquired another oil-market flashpoint.
Houthi missile and drone attacks on southern Saudi Arabia on Tuesday wounded 73 people, set fires at energy facilities and temporarily disrupted operations at sites linked to Saudi Aramco. The attacks also put the Red Sea’s Bab al-Mandeb chokepoint under fresh pressure just as the Strait of Hormuz remains severely impaired.
That combination is making the prospect of substantially lower oil prices before the end of 2026 look increasingly remote and the fear is oil can slip back into above-$100 territory.
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A second supply route is now under threat
Brent crude briefly climbed above $99 a barrel on Tuesday, reaching its highest level since July 24, while West Texas Intermediate approached $95. The move came after attacks on Abha, Khamis Mushait, Jazan and Najran, with Saudi authorities saying women and children were among the 73 wounded. Fires were reported at energy and utility facilities and some operations were temporarily halted.
The significance for oil markets goes beyond the immediate physical damage. Saudi Arabia is the world's second-largest oil producer after the United States and the world's leading crude exporter. Its ability to move crude through multiple routes has therefore been an important buffer during the war.
That buffer is now under pressure from both ends. The Strait of Hormuz, through which more than 20 million barrels a day moved before the war, is handling only a fraction of its previous traffic. The US Energy Information Administration estimates that flows through Hormuz averaged just 4.9 million barrels per day in the second quarter, down from 21.6 million in the final quarter of 2025.
At the same time, Saudi Arabia diverted more crude towards its Red Sea port of Yanbu, lifting flows through Bab al-Mandeb to an estimated 8.1 million barrels a day in the second quarter from 5.4 million in the previous quarter.
That makes the Houthi threat to the Red Sea route particularly important. The group declared a blockade of Saudi shipping in July and has attacked Saudi tankers. Tuesday's strikes show that its campaign is no longer confined to ships at sea.
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Bab al-Mandeb is an alternative route for Saudi crude when Hormuz is disrupted. Its alternatives through the Suez Canal and the SUMED pipeline are slower, more expensive and constrained by capacity.
