IRGC demands Saudi end Yemen blockade as oil tops $95

Iran's Islamic Revolutionary Guard Corps publicly called on Saudi Arabia to end its blockade of Yemen, escalating a confrontation that has already pushed Brent crude above $95 a barrel and threatened two of the world's most critical oil shipping chokepoints.

"The IRGC's demand comes as part of a broader strategy to pressure Riyadh through its Houthi proxies, who have already demonstrated their ability to disrupt Red Sea shipping," said Elena Fischer, a geopolitical risk analyst at Edgen. "This is a direct challenge to Saudi Arabia's energy export routes at a time when the kingdom has already been forced to divert oil away from the Strait of Hormuz."

The call followed a series of escalations that began July 13, when Iran flew between 10 and 21 IRGC commanders and military advisers into Yemen on a Mahan Air flight, according to four sources including two Iranian officials who spoke to Reuters. The aircraft, originally bound for Sanaa, diverted to Hodeidah after the Saudi-backed Yemeni government struck the airport. The flight also carried missile and drone components, as well as gold to fund Houthi operations, the sources said.

Three days after the IRGC personnel arrived, Tehran instructed the Houthis to stand ready to close the Red Sea oil route if the U.S. struck Iranian power infrastructure. On July 20, the group announced a naval blockade targeting Saudi-linked vessels in the Bab el-Mandeb Strait, and by July 23 had struck two Saudi oil tankers — the first such attacks in the waterway since the current conflict began.

Oil markets react as two chokepoints come under threat

Brent crude rose 1.76% to $95.73 a barrel in Asian trading Thursday, while West Texas Intermediate gained 1.41% to $88.05, both reaching six-week highs. The rally accelerated after Iran's Revolutionary Guards claimed an oil tanker had caught fire attempting to transit a mined shipping route south of the Strait of Hormuz, with two additional tankers turning back.

The Bab el-Mandeb Strait normally handles about 12% of global trade and roughly one-quarter of worldwide container traffic. Its importance has grown as the U.S.-Iran conflict has sharply curtailed shipping through the Strait of Hormuz, which handles about 21% of global oil consumption. Saudi Arabia has increasingly relied on Red Sea export routes to transport oil to international markets after the Hormuz chokepoint became contested.

The Houthis claimed to have forced at least nine ships to turn back from Bab el-Mandeb since announcing their blockade. The group's media office described the allegations that Iran sent military experts to Yemen as "lies and fabrications," saying all passengers aboard the July 13 flight were civilians.

The last time the Houthis conducted a sustained campaign against Red Sea shipping during the Gaza war in 2023-2024, they attacked more than 100 vessels, and global shipping costs surged as container lines rerouted around the Cape of Good Hope. The current escalation carries similar risks but with the added dimension of simultaneous pressure on both Hormuz and Bab el-Mandeb.

U.S. warns of consequences as strikes continue

Secretary of State Marco Rubio accused Iran of flying IRGC personnel into Yemen, saying the actions helped ignite the renewed confrontation. "They decided to send direct flights from Tehran into Yemen, carrying IRGC elements and others into the country," Rubio told reporters in Manila. He warned that allowing Iran to control international waterways would set "a very dangerous precedent."

President Donald Trump said Tuesday that the Houthi threat had not yet materialized but warned of "major military punishment" against Iran if the group continued attacks. The U.S. military carried out its 12th consecutive night of strikes against Iranian targets, with Central Command saying the latest operations targeted aircraft hangars and drone storage sites.

The EIA reported that commercial crude inventories increased by 2 million barrels last week, defying analyst expectations for a draw of about 1.1 million barrels. Under normal circumstances the build would have weighed on prices, but geopolitical risk continues to dominate sentiment.

Oman has presented Iran with a Gulf-backed proposal for a voluntary fee system for vessels transiting the Strait of Hormuz, according to Reuters, as regional powers seek to de-escalate before the crisis further disrupts global energy supplies. Iran's foreign ministry was not immediately available to comment on the IRGC's latest demand regarding Yemen.

This article is for informational purposes only and does not constitute investment advice.