Oil prices climbed Thursday after Iran escalated its fight with the United States and reportedly told Yemen’s Houthis to prepare to shut down a major Red Sea oil route if President Donald Trump targets Iranian power infrastructure.
The threat added another dangerous front to the growing Middle East crisis, where Tehran is already trying to squeeze global energy supplies through the Strait of Hormuz.
Brent crude futures rose 88 cents, or 1.04%, to $85.83 a barrel at 1237 GMT.
U.S. West Texas Intermediate crude futures rose 94 cents, or 1.18%, to $80.54 a barrel.
The price jump came after Iran and the U.S. exchanged heavier fire Thursday.
The U.S. targeted Iranian coastal defenses and missile sites after reimposing a naval blockade on Iranian ports.
Iran responded with missiles and drones fired at U.S. military bases in neighboring countries, including a recently expanded air base in Jordan.
Tehran is also reportedly preparing to use its Houthi allies in Yemen to threaten Bab el-Mandeb, the gateway to the Red Sea.
Three sources told Reuters that Iran asked the Houthi movement to stand ready to close the route if the U.S. strikes Iranian power infrastructure.
The move would threaten one of the world’s most important energy corridors and drag another Iran-backed proxy deeper into the conflict.
“Simultaneous disruptions affecting Hormuz and Bab el-Mandeb would significantly amplify supply chain stress, increase tanker availability constraints, and raise insurance premiums,” said Wael Makarem, financial markets strategist lead at Exness.
JUST IN:
Iran has asked Yemen’s Houthi to prepare to close Red Sea oil shipping routes if the United States attacks Iran’s power infrastructure – Reuters pic.twitter.com/O4NQP44VGf
— Current Report (@Currentreport1) July 16, 2026
The Bab el-Mandeb strait carried 7.4 million barrels of petroleum per day in June, about 7% of global oil output, according to Kpler data.
That was up from 4.2 million barrels per day last year.
Closing the strait would open a new front in the energy crisis and give Iran another way to punish global markets while hiding behind its terrorist proxy network.
The idea has been discussed inside the Islamic Republic’s leadership, according to two senior Iranian sources and a regional source familiar with the matter.
The sources spoke on condition of anonymity.
They said the message was recently passed to Iran’s Houthi allies, though they did not say exactly how it was conveyed or whether it came after Trump’s Tuesday threat to attack Iranian power infrastructure.
A source close to the Houthis said the group had already completed preparations to attack shipping by deploying missiles and drones near Bab el-Mandeb in Yemen’s highlands overlooking Hodeidah and the Gulf of Aden.
The source said the Houthis were waiting for the order to begin.
Iran’s foreign ministry and a Houthi spokesperson were not immediately available to respond to Reuters’ request for comment.
Iranian negotiator Mohammad Baqer Qalibaf said Tehran is in an “existential war” with the U.S. and that Iran’s security depends on controlling the Strait of Hormuz.
That is the regime saying the quiet part out loud.
Iran wants control of the world’s oil chokepoints, and it is willing to use missiles, drones and proxies to get it.
The chaos also hit Iraq on Thursday, where crude oil loading was briefly suspended at all Iraqi terminals after a drone crashed into an oil tanker at the Basra terminal, according to four Iraqi oil and security sources.
The drone did not cause damage or a fire, and it was not immediately clear who launched it.
An oil ministry spokesperson said loadings had resumed at Iraq’s southern ports and that officials were investigating.
Ali Nazar, head of Iraq’s state oil marketer SOMO, said the incident was not a direct attack on the terminals or vessels there.
“It is not targeting Basra Oil Terminal. Its target is another place. Loading is at normal rates depending on the vessels’ availability,” Ali Nazar told Reuters.
Trump hailed Iran’s release of a U.S. citizen as a ‘gesture of goodwill,’ but the battlefield is telling a much harsher story.
Iran is firing at U.S. allies, threatening shipping lanes and leaning on the Houthis to hold global energy hostage.
The mullahs wanted leverage over oil.
Now the markets are reacting to the price of letting Iran think it can run the waterways.
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