Oil crosses $100 as Trump threatens larger Iran attack

Oil rose above $100 a barrel on Thursday, 23 July, after US President Donald Trump said he was considering a “massive attack” on Iran and Houthi rebels claimed strikes on Saudi oil tankers in the Red Sea.

Brent crude crossed the $100 mark for the first time since May, extending a sharp rise driven by fears that the widening conflict could disrupt production, shipping routes or exports from the Gulf.

The immediate escalation came after the Houthis said they attacked the Saudi tankers Encelia and Layla. The Encelia was reported to have been hit and set on fire, while the condition of the second vessel was initially unclear. The group said the ships had violated a maritime blockade it had declared against Saudi Arabia.

Trump said Washington held Iran responsible for attacks by the Houthis and was prepared to carry out much larger strikes. The United States was already conducting attacks on Iranian targets as the conflict entered its second week.

The risk premium in oil is now spreading beyond concerns about isolated attacks on ships. Traders are assessing whether Iran could threaten the Strait of Hormuz, whether Saudi infrastructure could be targeted and whether US action could draw other regional powers more deeply into the war.

Any sustained disruption would have a particularly severe impact on India, which imports close to nine-tenths of the crude oil it consumes. Higher prices increase the country’s import bill, put pressure on the rupee and feed into transport, manufacturing and consumer inflation.

Indian refiners may also face higher freight and insurance costs if vessels avoid exposed routes or war-risk premiums rise. Even where oil supplies remain physically available, the cost of moving them can increase quickly during a regional conflict.

The effect is already visible across financial markets. Rising oil has weighed on Indian equities and government bonds while reducing expectations that easing inflation will give the Reserve Bank of India room to lower interest rates.