Dual Chokepoint: Hormuz Near Shutdown, Red Sea Under Threat as US-Iran War Enters Critical Weekend

The world’s oil is trying to get to market through two closing doors at once. On August 1, the Strait of Hormuz — normally carrying roughly a fifth of global oil supply — has been reduced to “very limited and sporadic vessel movements” by Gulf exporters, according to Jorge Leon, Rystad Energy’s senior vice president and head of geopolitical analysis^[1]. Saudi Arabia rerouted as much as 4 million barrels per day through its Yanbu terminal on the Red Sea to compensate. Now Houthi forces are threatening a naval blockade against Saudi Arabia at the Bab el-Mandeb Strait, putting 2.5 million barrels per day of Saudi crude directly in the crosshairs^[1].

Meanwhile, tankers are being hit. The UK Maritime Trade Operations Centre reported Saturday that a tanker northeast of Oman was struck by an “unknown projectile” damaging its engine room, while another vessel reported “a large splash and explosion in close proximity”^[2]. A Qatari LNG tanker was struck while transiting the Strait of Hormuz overnight^[3]. On Thursday, a drone hit two ships at Egypt’s Mediterranean port of Damietta, triggering a fire — the first attack on Egyptian soil since the US-Iran war began on February 28^[2].

Brent crude settled above $90 on Friday, with West Texas Intermediate closing at $84.67 per barrel^[2]. Prices had dipped below $88 earlier in the week on Qatar’s proposed ten-day ceasefire, but Rystad cautioned the pullback “reflects diplomatic optimism rather than any meaningful improvement in the physical supply picture”^[1].

Weekend Strike Window

The Wall Street Journal reported Friday that President Trump has ordered the military to launch a fresh attack on Iran that could begin as soon as this weekend, though officials told the Journal he could call off the strikes if diplomatic progress materializes^[2]. Axios cited a US official saying Trump is “seriously considering” attacking Iranian energy targets in the coming days but has not given final orders^[2].

“We will be hitting them very hard,” Trump said Friday at a televised cabinet meeting at Camp David. “And you know at some point, they’re going to say, ‘We just can’t take it anymore’”^[2].

Iran’s response has been to threaten the closure of additional maritime chokepoints. Mohammad Bagher Zolghadr, Secretary of Iran’s Supreme National Security Council, warned that “the continuation of the naval blockade and warmongering by the US regime will not only lock the Strait of Hormuz tighter, but will also shut down other straits and chokepoints,” adding that “the price for this will be paid by the global economy, the energy market, and American voters”^[2].

A temporary ceasefire following a US-Iran memorandum of understanding signed on June 17 has “effectively broken down”^[2]. The US reimposed a naval blockade on Iranian ships on July 13, preventing its vessels from entering or leaving ports, and CENTCOM has rerouted approximately 30 commercial ships near Iran^[4].

The Senate Sanctions Bill: A Second Front

While the Iran conflict escalates militarily, a second front is opening legislatively. The “Lindsey O Graham Sanctioning Russia Act of 2026” advanced in the US Senate with an overwhelming 86-to-12 vote on July 28, with Ukrainian President Volodymyr Zelenskyy watching from the gallery^[5].

The bill would give the president authority to impose tariffs of up to 100 percent on exports to the US from the top five purchasers of Russian energy — putting China, India, and Turkiye directly in the crosshairs^[5]. Tariffs of up to 500 percent could be applied to Russian imports directly into the US. It also sanctions President Putin and more than 20 top officials, and targets Russia’s “shadow fleet” of oil tankers used to evade existing sanctions^[5].

Trump ordered lawmakers on Wednesday to amend the bill to include tariffs covering Iran as well, which analysts say will likely delay passage by deterring Democratic support^[5]. The House is currently in summer recess. Even Pay, a director at Trivium China, noted that if passed, the legislation “would give Trump something he’s wanted for a while, namely the legislature’s permission to impose high tariffs on China”^[5] — particularly significant after the Supreme Court struck down many of his earlier tariff assertions in February.

India finds itself in an especially precarious position. Its attempts to diversify away from Russian energy were disrupted by the Strait of Hormuz shutdown, and it has received US sanction waivers to continue buying Russian oil in the interim^[5]. The Atlantic Council’s Maia Nikoladze wrote that “India will face a trade-off between maintaining energy security and managing the risk of US tariffs”^[5].

The Mega-War: Two Conflicts Converging

What makes this moment structurally different from earlier flare-ups is the visible convergence of the Iran and Ukraine wars. Last weekend, Ukraine announced it attacked an Iranian cargo ship ferrying military supplies between Iran and Russia in the Caspian Sea^[6]. Days later, drones struck LNG tankers at Egypt’s Mediterranean port — the first attack on Egyptian soil during the Iran war^[6].

Dan Alamariu, chief geopolitical strategist at Alpine Macro, warned that “the Iran and Ukraine wars may be connecting. A Ukrainian strike in the Caspian Sea was followed within days by burning gas ships on the Mediterranean. It may not be coincidental; there is a tail risk of some convergence between the two conflicts”^[6].

Saudi Arabia has responded by forming a military coalition to protect Red Sea shipping, with 14 countries offering support including Turkey, Egypt, Pakistan, and Nigeria^[6]. Ukraine has separately signed a security agreement with Saudi Arabia to provide expertise in defending against Iranian-designed drones^[6].

Meanwhile, Russia is expanding its own map. In recent weeks, it has launched drones at Romania while a Russian missile landed in Poland, violating NATO airspace — the first known case involving a Russian missile^[6]. The Center for European Policy Analysis said the incursions signal that Russia’s “shadow war” against NATO is moving southward^[6].

Energy historian Daniel Yergin, S&P Global vice chairman, framed it starkly: “Think about all the seas — the Persian Gulf, the Red Sea, the Mediterranean, the Black Sea, the Baltic Sea, the Caspian Sea — these have all become arenas for oil war”^[6].

The Macro Backdrop: Inflation Risk Resurfaces

The geopolitical escalation is colliding with a macro environment that was just beginning to normalize. The latest FRED snapshot shows CPI inflation at 3.46% year-over-year, with the Fed funds rate at 3.63% — the central bank having cut substantially from its 2024 peak^[7]. The 10-year Treasury sits at 4.67%, up 33 basis points year-over-year, while the yield curve has normalized to a positive 0.45% slope between 10s and 2s^[7].

But consumer sentiment remains depressed at 49.5 on the Michigan index, down 18.45% year-over-year — a level historically associated with recessionary periods^[7]. The VIX closed the June snapshot at 20.66, up 29% year-over-year, but well below crisis territory — suggesting markets have not yet fully repriced the geopolitical tail risk now accumulating^[7]. High-yield credit spreads at 2.84% remain tight, up only 9 basis points month-over-month^[7].

The closest historical analogs in the FRED data are mid-2006 and October 2007 — periods where inflation was running near 4%, the Fed was holding, and the system was months away from a credit event that few saw coming in real time^[7]. The parallel is imperfect: the geopolitical risk today is an energy supply shock, not a housing-credit unwind. But the pattern of tight spreads, elevated but contained volatility, and a central bank reluctant to move is familiar.

Rystad’s Leon was direct about what a sustained disruption at both chokepoints would mean: if a ceasefire doesn’t materialize, Hormuz stays largely closed, and Houthi threats in the Red Sea intensify, “the risk of a significant rebound in oil prices would be substantial”^[1]. Naeem Aslam, CIO at Zaye Capital Markets, added that a strike affecting Iranian production facilities or export terminals “could push Brent back above $90 per barrel by raising freight rates, insurance costs, and replacement-supply expenses”^[1].

What to Watch Next

1. Weekend strike decision. Whether Trump authorizes attacks on Iranian energy infrastructure — refineries, export terminals, or shipping infrastructure — will determine whether Brent holds above $90 or pushes toward $100+. The Journal’s reporting suggests a decision could come within 48 hours^[2].

2. Bab el-Mandeb escalation. If Houthi forces act on their blockade threat against Saudi Arabia, the 2.5 million bpd rerouted through the Red Sea would lose its escape route. Watch Saudi Arabia’s 14-nation coalition for any operational response^[6].

3. House vote on the Graham sanctions bill. The House returns from summer recess with the bill waiting. Trump’s demand to add Iran tariffs could fragment the bipartisan 86-12 coalition. If it passes with Iran provisions intact, China and India face a choice between Russian energy access and US market access^[5].

4. Iran-Ukraine convergence. Whether the Caspian-to-Mediterranean sequence of attacks marks a genuine merging of the two conflicts or a coincidental escalation will shape whether NATO’s Article 5 calculus enters the picture. Russia’s missile landing in Poland has already crossed a threshold^[6].

5. Inflation pass-through. Brent above $90 for a sustained period would put upward pressure on CPI just as the Fed has cut to 3.63%. The June FRED data shows inflation at 3.46% — an oil shock that pushes it back toward 4% would complicate the Fed’s easing path and test the optimistic rate-cut pricing embedded in the current yield curve^[7].

6. Credit and volatility repricing. HY spreads at 2.84% and VIX at 20.66 look calm relative to the scale of disruption underway. A gap higher in either would signal that markets are moving from “diplomatic optimism” to pricing the physical supply shock Rystad warns is already here^[1][7].