Oil price safety net is beginning to fray

The Iranian-aligned Houthis said on July 23 they struck two Saudi oil tankers in the Red Sea, amid a 12th successive night of U.S. strikes on Iran at President Donald Trump's direction.

Iran said it attacked U.S. missile systems, weapons and fuel storages in Jordan, as well as U.S. military posts in Kuwait including Al-Adiri Camp, Ali Al Salem Air Base, Doha Camp and Arifjan Camp.

The Yemen-based Houthi militants, who control areas near the Bab el-Mandeb Strait on the opposite end of the Arabian Peninsula from the Strait of Hormuz, said on July 20 they were imposing a naval blockade on Saudi Arabia.

Five tankers changed course in the Red Sea to avoid the Bab el-Mandeb Strait on July 22, and three tankers loaded with Saudi oil for China and India made U-turns the previous day.

The Houthis said their forces carried out missile and drone strikes on two Saudi oil tankers in the Red Sea, identifying them as the Encelia and the Layla. Saudi state news agency SPA cited an official source as saying the Encelia was struck, causing a fire at the bow. The attack on the Layla remained unconfirmed.

As of 0922 GMT, Brent crude for delivery in a month’s time was trading at $98 a barrel, compared to $84 a barrel on July 16.

(Editing by Aimee Donnellan; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on HAY/george.hay@thomsonreuters.com))

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By George Hay

LONDON, July 23 (Reuters Breakingviews) - Brent crude rose to $98 a barrel on fears of Houthi tanker attacks. Prices had stayed contained thanks to weaker demand, pipelines swerving the Strait of Hormuz and shrinking global stocks. Red Sea jitters hit the latter two supports, raising the risk of further price spikes.