Oil Hits $100 for First Time Since May After Attacks by Iran-backed Militants

• Trump vows punishment

Emmanuel Addeh in Abuja

Oil prices hit $100 a barrel yesterday for the first time since May, after attacks by Iranian-backed Houthi militants in the Red Sea threatened to squeeze global supplies further and reignite a global inflation shock.

Brent crude, Nigeria’s benchmark, rose more than 6 per cent to $100, extending a blistering rebound this month amid fears that the US and Iran are headed for a return to full-blown conflict.

Oil’s rally accelerated after the Houthis said they had attacked two Saudi Arabian tankers in the Red Sea following their move to impose a maritime blockade on the kingdom this week.

The targeting of the Saudi ships raised the spectre of the Houthis closing the Bab al-Mandab Strait, which connects the Red Sea with the Gulf of Aden and the Indian Ocean, Financial Times report said.

It has become a vital route for Saudi Arabia’s oil exports since Iran seized control of the Strait of Hormuz in the early days of the war. The attacks also risk unravelling a four-year ceasefire between the Houthis and Saudi Arabia.

Brent crude last traded at $100 on May 26 but tumbled in June after Washington and Tehran’s agreement to extend their ceasefire and reopen the strait raised hopes that oil supplies through the waterway would be swiftly restored.

The intervention from the Houthis comes following the breakdown of the ceasefire, with the US and Iranian forces trading fire for almost two weeks.

US President Donald Trump on Thursday warned the Houthis and Iran that they would face “major military punishment” if the attacks continued.

The Houthis are one of the most potent members of Iran’s so-called axis of resistance. But they have largely stayed out of the conflict, apart from firing several barrages of missiles and drones at Israel in March and early April.

There have been concerns, however, that the Houthis will co-ordinate with Tehran to close Bab al-Mandab to pile pressure on energy markets and global trade.

Oil prices had been falling following a temporary ceasefire between the US and Iran. They dropped back to levels last seen before the US and Israel began military action against Iran on February 28.

However, the ceasefire has failed and this week US Secretary of State, Marco Rubio,  said the people in charge in Iran were “not ready to make a deal”.

The ongoing conflict risks pushing up inflation for many countries, including Nigeria,  as higher oil prices typically lead to petrol and diesel becoming more expensive. Households are also seeing prices of goods, such as food, increase as businesses pass higher transportation costs to customers.