Oil prices climbed to their highest levels since early June on Thursday as the Middle East conflict opened a second major maritime front, with Yemen's Houthi militants firing missiles and drones at two Saudi crude oil tankers in the Red Sea in what maritime authorities described as the first direct attacks on tankers in that waterway since the broader conflict escalated. Brent crude futures for the September delivery contract rose 2.1% to $96 per barrel, while West Texas Intermediate futures for the same period gained 1.4% to $88.08, putting both benchmarks on course for their third-largest monthly gain in a decade.
The Houthi strikes arrived alongside the US military's 12th consecutive night of strikes on targets inside Iran, in what has become the longest unbroken streak of American combat operations against a single adversary since the early days of the Iraq war. US Secretary of State Marco Rubio said Iran is "not serious about" peace negotiations, with earlier ceasefire optimism from the Burgenstock Swiss talks in late June having effectively evaporated as military operations resumed in early July. President Trump vowed to destroy critical Iranian infrastructure — including power plants and bridges — following reports that Iranian-backed forces had killed at least three US service members during recent engagements.
The dual disruption risk is the key difference between Thursday's oil move and the brief de-escalation rally seen in June. The Strait of Hormuz, which accounts for roughly one-fifth of global seaborne crude supply, has seen severely reduced traffic since the conflict began, but Saudi Arabia and other Gulf producers had been routing some cargo through alternative channels, including the Red Sea. The Houthi strikes on Saudi tankers now threaten to close that workaround as well, leaving shippers with few viable options for moving Middle Eastern crude to Asian customers.
Energy sector ETFs are among the clearest beneficiaries in the US equity market. The Energy Select Sector SPDR fund has outperformed the S&P 500 by a wide margin over the trailing month, and integrated oil majors Exxon Mobil and Chevron have both seen consensus earnings estimates revised upward as sustained high crude prices flow through to upstream realizations. Refiners, which benefit from processing cheaper discounted crude, face a more mixed picture as feedstock costs also rise.
Airlines and other energy-intensive industrial names face mounting headwinds. The four major US carriers — Delta, United, American, and Southwest — have all flagged fuel cost pressure in recent public statements, with jet fuel prices tracking closely with Brent crude and representing 20 to 25 percent of total operating costs at most carriers. The combination of elevated fares driven by strong travel demand and rising fuel bills has so far kept airline earnings from deteriorating sharply, but a sustained push above $100 per barrel would be a significant test of that dynamic.
Defense contractors, including Raytheon parent RTX, Lockheed Martin, and L3Harris, have also drawn renewed investor interest given the sustained pace of US military operations in the theater, with procurement of precision munitions and surveillance systems accelerating as stocks are drawn down through continued strikes. The broader market impact of the oil move is complicated by the coincidence of a major earnings week for mega-cap technology companies, limiting the traditional inverse correlation between rising oil and equity market performance that characterized earlier phases of the conflict.