Iran Instructs Houthis to Prepare Red Sea Shutdown as Brent Holds at $88
Iranian contingency orders to Houthi forces add a second maritime closure threat on top of a Hormuz disruption already running at 5% of capacity.
Iran's leadership has instructed its Houthi allies to prepare to shut the Red Sea oil route if US strikes target Iranian power infrastructure, three sources told Reuters on Thursday (2026-07-17). ICE Brent crude front-month was trading at $88.10 per barrel as of Saturday morning (2026-07-18), extending a rally that accelerated when renewed US-Iran hostilities drove a 3.29% single-session advance to $86.04 on Tuesday (2026-07-14).4,2
Both maritime corridors are now under pressure simultaneously. The Strait of Hormuz, through which around 20% of the world's daily oil and liquefied natural gas exports typically flow, was operating at only 5% of its usual capacity as of Thursday (2026-07-17). Adding the Red Sea would block the two primary exit routes for Gulf crude headed westward.6,2
The week's price action reflects that shifting risk premium. Brent crude futures opened the week of 2026-07-13 having shed roughly 30% in the second quarter, and closed it approximately 11% higher. NYMEX WTI front-month gained a similar margin over the same period. Brent settled at $84.23 on Thursday (2026-07-16) after a brief profit-taking session before recovering to $85.28 by Friday morning (2026-07-17), with both benchmarks trading higher again by Saturday (2026-07-18).3,5
Hedge funds have substantially increased their exposure to Brent crude as the conflict has escalated, according to data cited by Yahoo Finance. That build in speculative long positions supports prices on adverse headlines. But it also makes the market vulnerable to sharp unwinds: any credible de-escalation signal — a ceasefire offer, a partial reopening of the strait — would find the market heavily positioned for further upside and exposed to a rapid reversal.6
Citi said in a research note that the probability of Iran abandoning its memorandum of understanding before the US midterm elections had increased. That scenario, the bank said, could result in oil prices remaining elevated for an extended period, with analysts placing the likely holding band at $85 to $90 per barrel if disruptions persist.2
The current rally has not revisited the June peak. Brent settled near $95 a barrel on Monday (2026-06-01) following an earlier escalation in the conflict, its biggest single-day gain since early May. Prices pulled back in the sessions that followed. Yet at $88.10 on Saturday morning (2026-07-18), ICE Brent front-month sits within the $85-$90 range analysts regard as consistent with prolonged supply-route disruption and roughly 7% below the June intraday high.1
Beyond crude volumes, Hormuz carries a separate LNG dimension: the strait handled around 20% of global LNG exports before the conflict intensified. JKM, the Asian LNG benchmark, was quoted at $20.98 per MMBtu as of Friday (2026-07-18), while ICE Endex TTF front-month settled at €57.51 per MWh. Neither market has moved to levels that imply a confirmed volume shortage, but both are exposed if the Red Sea order is activated and physical re-routing options narrow further.2
IG analysts said NYMEX WTI front-month could test the mid-$80 range provided it holds above key support in the mid-$70 zone. The immediate variable is the conditional order to the Houthis: a US strike on Iranian power infrastructure activates it, opening a second active maritime front in waters where Houthi disruption capability has already been demonstrated and is only partially reflected in the current forward curve.4