Brent Crude Surpasses $112 on New Geopolitical Threat
Global oil prices advanced sharply on March 29 after Yemen’s Houthi rebels fired missiles at Israel, opening a new front in the expanding Middle East conflict. The attack immediately injected a higher risk premium into the market, pushing Brent crude, the global benchmark, up 4.22% to close at $112.57 a barrel. West Texas Intermediate (WTI) gained 5.46% to settle at $99.64. Both benchmarks reached their highest prices since mid-2022, reflecting investor concern that the conflict is widening.
Houthi Entry Threatens Key Global Oil Chokepoints
The Houthis' direct involvement marks a serious escalation, threatening critical maritime routes essential for global trade. The attack puts shipping in the Red Sea and the Bab-el-Mandeb strait at greater risk. This escalation amplifies fears of a potential closure of the Strait of Hormuz, the world's single most important waterway for oil, through which roughly one-fifth of global supply passes. A prolonged disruption there would create a supply shock larger than those seen in the 1970s.
The decision by the Houthis to join the broader Middle East conflict marks a serious and deeply concerning escalation.
— Farea al-Muslimi, Chatham House.
"Schrödinger's Cat" Market Grapples With War Uncertainty
The oil market is now caught between two extreme possibilities, creating volatility that has produced price swings of as much as $35 in a single trading day. On one hand, a prolonged war that shuts down the Strait of Hormuz would trigger the worst oil crisis in history. On the other, traders recall recent geopolitical events where initial price spikes quickly reversed, making them hesitant to bet on a sustained disruption. This uncertainty has created a "Schrödinger's cat" market, where the world is simultaneously on the brink of a massive supply shock and a rapid return to normal, with prices reacting violently to every new development.
