Oil Prices Climb as Houthi Strikes Threaten Red Sea Shipping

Brent crude is trading near $97.59 a barrel, up about 3.7% on the day, and WTI is close to $89.48. The trigger is the Red Sea. Yemen’s Houthi forces declared a naval blockade on Saudi Arabia on Monday, then said they struck two Saudi tankers in the Bab el-Mandeb Strait.

Ships are turning around, and the market is pricing the risk that Saudi crude cannot get out through its back door.

For a currency trader, the money is not really in the barrel. It is in the pairs that lean on oil. The Canadian dollar and the Norwegian krone firm up when crude runs. The Japanese yen gets hurt, and it already has, with USD/JPY parked near 163 and Japan’s finance minister talking the currency up.

Ignore the $200 oil headlines floating around this week. Those come from models where the Red Sea and the Strait of Hormuz both shut at the same time and stay shut for months. It is possible. It is not a base case, and it is a terrible reason to size up a trade.

Prices quoted here were live on the morning of 23 July 2026 and will have moved by the time you read this. Check your own platform before acting on any level.

What Happened This Week?

The Houthis announced the blockade on Monday. By Thursday morning their spokesman said two Saudi tankers, the Encelia and the Layla, had been targeted for crossing it. Saudi Arabia’s state news agency confirmed a strike on one vessel, which was on fire.

One of those cargoes was headed to India. The other was going to China.

Shipping reacted fast. Twenty-seven vessels crossed the chokepoint on Wednesday, five of them crude tankers. The day before, 38 tankers had gone through. Matthew Wright, principal freight analyst at Kpler, said that even a couple of turnarounds tells you owners are treating the threat as real.

At the same time, the Strait of Hormuz is still barely functioning. Reuters counted 253 energy carriers stuck inside the Persian Gulf, including 102 crude tankers and 64 LNG ships.

That combination is what makes this week different. After Hormuz traffic collapsed in late February, Saudi Arabia shifted a large share of its exports to Yanbu on the Red Sea coast. Now the alternative route is being shot at as well. Two chokepoints under threat in the same conflict is rare, and the market knows it.

Why the Bab el-Mandeb Matters?

The strait sits between Yemen and Djibouti. Its name translates as the Gate of Tears, which is either poetic or grimly accurate depending on the week.

It carries roughly 4.2 million barrels of oil a day. Hormuz carries close to 21 million. So for crude alone, a full Bab el-Mandeb shutdown is painful rather than catastrophic.

The bigger number is trade. Around 15% of global maritime commerce passes through, and about 30% of container traffic, covering electronics, car parts, machinery, food and fertiliser. Ships can go around the Cape of Good Hope instead, but that adds roughly 10 to 14 days, plus fuel, charter and war-risk insurance costs.

The honest read is that this is a freight and inflation story at least as much as it is a crude story. Reuters analysts made the same point on Monday: the workarounds exist, they are just slow and expensive.

How Far Prices Have Already Moved?

Brent jumped about 4% on Wednesday to clear $94, its highest since 8 June. It broke $96 overnight during the twelfth straight night of US strikes on Iranian targets, then pushed past $97 on Thursday morning.

Zoom out and the move is bigger than it looks day to day. Brent is up roughly 22% over the past month and around 37% higher than a year ago, according to TradingEconomics. The 52-week range runs from $58.72 to $126.41.

That $126 high came earlier this year, right after the February escalation shut Hormuz. Goldman Sachs has since warned that $120 is back on the table if the conflict drags. Worth remembering the market has already been to that level once in 2026 and came all the way back down to the low $70s by early July. This is a market that moves in both directions violently.

Which Currency Pairs Are Reacting?

This is the part most oil coverage skips, and it is the part that pays your account.

USD/CAD

Canada exports oil. When crude rallies, the Canadian dollar usually strengthens, which pushes USD/CAD down. That relationship held earlier in July, with the pair slipping toward 1.4120 on a crude rally.

It is not automatic though. Tariff headlines and Bank of Canada policy have overridden the oil link more than once this year, so treat it as a lean, not a law.

USD/JPY and the Yen Crosses

Japan imports almost all its energy. Expensive oil is a straight tax on the country. Japan’s import bill hit a record this week and power prices reached a three and a half year high. USD/JPY has been pushing 163, and Japanese Finance Minister Katayama has already stepped in verbally to slow it down.

That makes yen shorts crowded and jumpy. If intervention comes, it comes without warning and the candle is enormous. CAD/JPY has become the cleanest oil expression in the majors, because you are long an oil exporter against an oil importer.

Norwegian Krone

Norway is Western Europe’s oil and gas supplier. Equinor just reported profit up 93% on the price spike. NOK tends to follow crude, though it is thinly traded, so spreads are wide and moves overshoot. Not a beginner pair.

US Dollar

Two forces are pulling the same way. Safe haven demand lifts the dollar during conflict. So does inflation. US headline PCE inflation ran at 4.1% in May with core at 3.4%, and pump prices are back above $4 a gallon. Traders have gone from expecting Fed cuts to pricing the risk of a hike. A hawkish Fed and a war premium together is a strong dollar, which is why dollar strength has been the path of least resistance all month.

Emerging Market Importers

India’s crude import bill has climbed about 60% this year and the IMF has flagged oil as a key risk to Indian growth. Pakistan is scrambling for alternative supply. Currencies of big energy importers tend to weaken in this environment, and the central banks defending them tend to burn reserves doing it.

How New Traders Should Handle a Week Like This?

Spreads widen when news breaks. The gap between the buy and sell price on oil and on yen pairs can triple in seconds, so a position that looked fine on paper opens at a loss. Check the live spread before you click, not the number on the broker’s marketing page.

Stops get skipped. In fast markets, your order fills at the next available price, which can be far from where you set it. A guaranteed stop costs more and is worth considering while headlines are flying.

Weekend risk is real right now. Missile strikes do not wait for the London open. If you would not be comfortable seeing the market reopen 3% against you, close it Friday.

Size smaller than usual. This is the single most useful thing on the page. Halve your normal position and you can be wrong twice and still be trading next week.

Do not chase the first candle. The initial move on a headline is usually the worst entry of the day. Waiting for the pullback costs you a few pips and saves you the occasional account.

The Short Version

Oil is high because two shipping chokepoints are under threat at once, not because demand suddenly exploded. That means the price is hostage to headlines, and headlines cut both ways. Trade the currency pairs rather than the barrel if you are new, keep your size down, and treat every forecast above $120 as an opinion rather than a plan.