Three Chokepoints, No Way Out: Oil Breaks $100 as Every Shipping Route Comes Under Fire

The world’s oil supply is running out of detours. For the first time in the modern history of energy markets, three of the most critical maritime chokepoints — the Strait of Hormuz, the Bab el-Mandeb Strait, and the Black Sea — are under simultaneous, active military threat. The result: Brent crude broke $100 per barrel on Thursday for the first time since May, the 10-year US Treasury yield surged to 4.71%, its highest level since January 2025, and markets are now pricing a 36% chance the Federal Reserve raises rates at its meeting next week.^[1]

This is not a single conflict creating a single disruption. It is a convergence: Iran asserting control over Hormuz, its Houthi allies blockading the Red Sea route Saudi Arabia was using as a backup, and Ukraine striking Russian-linked tanker traffic in the Black Sea. As RBC’s head of global commodity strategy Helima Croft put it, oil shipments by sea from the Middle East are increasingly facing a “no-way out” scenario.^[2]

Hormuz: The MOU Collapse and the Traffic Collapse

The Strait of Hormuz, through which roughly 20% of global oil supply transits, had briefly reopened after the US and Iran signed a memorandum of understanding on June 17 to restore freedom of navigation. That agreement has collapsed. Ship traffic through Hormuz has plunged, and at least a dozen tankers have been struck this month alone, killing at least two seafarers.^[2]

According to the International Maritime Organization, 61 commercial ships have been attacked in the Persian Gulf, Strait of Hormuz, and Gulf of Oman since March 1, resulting in the deaths of at least 17 seafarers and dozens of injuries. Iran has stepped up attacks on tankers in and around the strait as it tries to impose control over the corridor.^[2]

President Trump on Thursday vowed that Iran and its Houthi allies would both soon receive “major military punishment,” after the Houthis struck two Saudi oil tankers in the Red Sea.^[3] The rhetoric marks a clear escalation from the June MOU period and signals that the US is preparing a larger military response.

Bab el-Mandeb: Saudi Arabia’s Backup Route Is Now Blocked Too

The Houthi declaration of a “maritime embargo” against Saudi Arabia on Monday opened a second front. At least seven oil tankers made U-turns near Yemen after the embargo was announced, according to BBC Verify ship-tracking data.^[4] The Houthis then fired on two Saudi tankers in the Red Sea on Thursday, enforcing a blockade of the Bab el-Mandeb Strait — the very route Saudi Arabia had been using as a backup for oil exports ever since the Strait of Hormuz became dangerous.^[3]

The Saudis can theoretically redirect oil through a pipeline from their Red Sea coast across Egypt to the Mediterranean, but the logistics are punishing. Supertankers cannot transit the Suez Canal fully loaded because the channel is too shallow, meaning cargo must be partially offloaded at Ain Sokhna, piped to Sidi Kerir, and reloaded on the other side. The roundtrip journey around Africa takes approximately eight weeks.^[2] Nearly 15% of global sea trade normally moves through the Red Sea.^[4]

Two Chinese supertankers carrying a combined four million barrels of Saudi crude did manage to exit the Red Sea via the Bab el-Mandeb Strait, sailing past the Houthi blockade — a signal that the Houthis may be selectively targeting Saudi-flagged vessels while allowing Chinese traffic through, complicating the security calculus further.^[4]

Black Sea: Ukraine’s Drone War Hits a Kazakh Lifeline

While the world focuses on the Middle East, a third chokepoint is deteriorating in Europe. Ukraine says it has attacked more than 150 tankers, cargo ships, and other vessels associated with Russia’s “shadow fleet” in the Sea of Azov and Black Sea.^[2] The most consequential target: the Caspian Pipeline Consortium (CPC), which moves roughly 80% of Kazakhstan’s crude oil through a pipeline to the Russian port of Novorossiysk on the Black Sea.

The CPC suspended loadings due to the attacks, forcing Kazakhstan to cut production from approximately 1.7 million barrels per day.^[2] Kazakhstan has limited alternatives to the pipeline, meaning its output faces potential shut-ins. Romania is the most exposed European buyer of Kazakh crude.^[5]

Beyond crude, Ukraine’s strikes on Russian refineries have taken more than 50% of Russia’s refining capacity offline, tightening the global diesel and products market. Russia has responded with an export ban on petroleum products, further constraining supply.^[2]

The Bond Market Flashes Red

The oil surge is not staying contained in commodity markets. The 10-year US Treasury yield rose four basis points on Thursday to 4.71%, its highest level since January 2025 — up from below 4% before the Iran war began in late February.^[1] The 30-year yield recently hit its highest level since 2007.^[1]

The bond market moves reflect a double concern: oil-driven inflation reigniting just as fiscal deficits widen. The war with Iran has cost the United States $37.5 billion so far, according to Defense Secretary Pete Hegseth.^[1] JPMorgan Chase CEO Jamie Dimon said this week he would not purchase long-dated US Treasuries at current prices, citing deficit and inflation concerns, and warned that “bond market vigilantes” could re-emerge.^[1]

Markets are now pricing a 36% probability that the Fed raises rates at next week’s policy meeting, according to CME FedWatch — a stunning shift given that rate cuts were the consensus expectation just months ago.^[1] The average 30-year fixed mortgage rate rose to 6.58% this week, the highest in almost a year.^[1]

Equities: Tech Sells Off, Small Caps Wobble

The S&P 500 fell 1.2% on Thursday, with the Dow dropping 507 points, or nearly 1%, and the Nasdaq Composite sinking 2.15%.^[1] The sell-off was amplified by disappointing earnings from Tesla, which sank 14.5%, and Alphabet, which dropped nearly 7% after raising its AI spending forecast.^[1]

Friday brought a partial reprieve. Oil prices eased nearly 4%, with Brent settling at $96.78 and WTI at $89.31, after a Reuters report that Pakistan is considering a Chinese-backed initiative to mediate new peace negotiations between the US and Iran.^[6] The S&P 500 ended Friday 0.1% higher, the Dow rose 0.5% to 51,947, but the Nasdaq 100 slipped another 1.2%, and the VanEck Semiconductor ETF (SMH) fell 3.2% as chip stocks sold off.^[6] All three major indices posted their second consecutive weekly loss.^[6]

What Would Have to Be True for De-escalation

The Friday oil pullback offers a thread of hope, but the structural problem remains: three chokepoints are threatened simultaneously, and none of the parties attacking shipping have signaled willingness to stop. For the de-escalation case to hold, several things would need to be true:

• The Pakistani mediation channel produces substantive talks, not just a headline. China has a strategic interest in keeping Saudi oil flowing — it is the largest buyer — and may have leverage over both Iran and the Houthis that Washington lacks.
• The US opts for a measured response rather than the “major military punishment” Trump has threatened. A full-scale strike on Iran would likely close Hormuz entirely, taking 20% of global oil supply offline overnight.
• Ukraine’s Black Sea campaign does not further expand to permanently disable the CPC pipeline, which would force prolonged Kazakh production shut-ins.
• Saudi Arabia finds a workable long-term workaround through the Egyptian pipeline route, accepting the higher cost and longer transit times as a semi-permanent reality rather than a stopgap.

The base case, as Capital Economics put it, is that “unless signs of de-escalation across the various conflicts emerge, the risks to oil prices are skewed to the upside.”^[1] RBC’s Croft warned that in a worst-case scenario of full-scale regional war, Brent could surpass the 2008 peak of $148 per barrel.^[2]

What to Watch Next

• Fed policy meeting (next week): Whether the 36% hike odds climb toward a coin flip as the meeting approaches. Any hawkish language from new Fed Chair Kevin Warsh on oil-driven inflation would amplify the bond-market move.^[1]
• US military response to Iran: The scale and duration of any strike will determine whether Hormuz remains partially open or closes entirely. Watch for CENTCOM statements and ship-tracking data in the Gulf.
• Megacap tech earnings (Microsoft, Meta, Apple — next week): These results arrive against the backdrop of a risk-off market. AI capex guidance will be parsed for whether the spending is generating returns or eroding margins, and whether oil-driven cost pressures are feeding into corporate outlooks.
• CPC pipeline status: Any announcement on resumption of loadings at Novorossiysk, or further Ukrainian strikes, will directly affect Kazakh production and European diesel supply.
• Houthi targeting patterns: Whether the Houthis continue to exempt Chinese-flagged vessels while blockading Saudi ships. If the blockade becomes indiscriminate, the insurance and freight implications would multiply across global shipping.

This article is research commentary, not financial advice. It synthesizes publicly reported information from the cited sources as of July 25, 2026.