A series of escalating attacks by Iran-backed Houthi rebels on oil tankers and Saudi facilities is pushing the United States and Iran closer to direct confrontation, raising the risk of major disruptions to global oil supplies. For consumers, this could mean higher gasoline prices and renewed inflation pressure.
The Houthis, who control large parts of Yemen, have launched missiles and drones at Saudi oil infrastructure and commercial vessels in the Red Sea. They say they are retaliating against the Saudi-led military campaign in Yemen and showing support for Iran. The United States has responded by pausing some military strikes while weighing a more aggressive response, including potential strikes on Iranian assets.
On Sunday, the Houthis fired a barrage of missiles at a Saudi oil terminal, causing a brief fire but no casualties. Hours later, a U.S. Navy destroyer intercepted two drones heading toward a tanker in the Bab el-Mandeb strait. The incidents follow weeks of increasing tensions after the collapse of a U.N.-brokered cease-fire in Yemen.
The violence has already forced several shipping companies to reroute tankers away from the Red Sea, adding days and costs to voyages. The Strait of Hormuz, through which about 20% of the world's oil passes, has seen heightened naval patrols. Analysts warn that any sustained disruption could push oil prices above $100 a barrel, feeding into the broader inflation challenge already complicated by Trump-era tariffs.
Consumers in the U.S. and Europe face the prospect of higher fuel costs just as summer driving season begins. Oil-importing countries in Asia are also vulnerable. The Biden administration is under pressure from both hawks who want a tough military response and critics who fear a new Middle East war.
The coming days will be critical. The U.S. is reportedly considering a range of options, from targeted cyber operations to direct strikes on Houthi launch sites. Diplomatic channels with Iran remain open, but Tehran has shown little willingness to rein in its proxy. The situation remains fluid, with the risk of miscalculation high.