27JUL

Brent at $112 as Houthis enter the war

2 min read

10:27UTC

Oil climbed 4.2% to $112.57 as the Houthi attacks added a second chokepoint threat to a market already pricing in near-total Hormuz closure.

← Back to Saudi crude reroutes to Suez, freight bites Jump to analysis ↓

EconomicAssessed

Key takeaway

Brent's 51% monthly gain reflects dual-chokepoint risk not yet fully priced by markets.

Brent Crude settled at $112.57 on 28 March, up $4.56 (4.22%), driven by Houthi entry into the conflict ¹. WTI crossed $100 for the first time since the Houthi escalation began. The monthly gain of approximately 51% is the largest single-month increase since the COVID recovery in mid-2021. Goldman Sachs estimates a $14 to $18 per barrel geopolitical risk premium is already baked into the price.

The Majlis Hormuz toll bill is expected to be finalised this week. Passage would embed Hormuz control in Iranian domestic law, making it constitutionally harder for any future negotiator to concede the point. The de facto $2 million per-voyage toll is already operational, denominated in Chinese yuan, with refusal to pay triggering boarding by IRGC naval forces. IEA demand destruction (growth revised down 210,000 barrels per day) suggests the price surge is partly offset by recession-driven demand collapse .

Deep Analysis

In plain English

Oil has risen 51% in 29 days, from about $67 per barrel before the war to $112.57. For comparison, petrol in the UK is now roughly £3.50 to £3.70 per litre where it was under £2.20 before the conflict. The immediate driver is the near-total closure of the Strait of Hormuz, through which 20% of the world's oil normally flows. The Houthi entry into the conflict on 28 March added another 4.22% to the price in a single day. The Iranian parliament is expected to pass a law this week making the Hormuz toll permanent under Iranian domestic legislation. If it does, markets will likely price in a longer-term disruption, pushing prices higher still.

Source Landscape

This story draws on mixed-leaning sources from United States

United States

Primary parallel: The 1973 Arab oil embargo produced a 300% price increase in five months. The current 51% increase in 29 days is faster in velocity but remains lower in absolute terms. Both events triggered recessions in oil-importing economies.

Counter-parallel: In 1973, the US had no domestic shale production; the energy transition had not begun; and there were no strategic petroleum reserves of comparable scale. The IEA's 400 million barrel release is a buffer the world did not have in 1973.

Brent's 51% monthly gain represents the largest single-month increase since mid-2021. The Majlis toll bill, expected to pass this week, would embed a $2 million per-vessel toll structure in Iranian domestic law. Passage would likely trigger a further market repricing as the duration premium on the disruption extends.

At $112.57 per barrel, UK retail petrol prices are approximately £3.40 to £3.70 per litre depending on refinery margin assumptions. Goldman Sachs's $14 to $18 geopolitical risk premium implies the underlying commodity cost would fall to $94 to $98 if the conflict ended tomorrow. The IEA's demand revision of -210,000 b/d signals early recession pressure that may widen if prices remain elevated through May.

Consensus view: Goldman Sachs commodity research and JP Morgan energy strategy desks both identify a $14 to $18 per barrel geopolitical risk premium in current Brent pricing above fundamentals, noting that markets are not yet pricing the full demand-destruction scenario because the war's duration remains uncertain.

Counter-view: Saudi Aramco's investment committee and OPEC Secretariat economists warn that the recession signal in IEA demand data (-210,000 b/d revision) may accelerate faster than the geopolitical premium sustains; a demand-driven price collapse could occur simultaneously with supply disruption.

Key tension: Whether the Majlis Hormuz toll bill passage this week, converting de facto IRGC control into domestic law, will force markets to price in a permanent rather than temporary Hormuz disruption, triggering the next price surge.

Sources:International Energy Agency·CNBC

Mentions:Strait of Hormuz →Iran →Islamic Revolutionary Guard Corps (IRGC) →International Energy Agency →Majlis →

First Reported In

Update #51 · Iran hits aluminium plants; Hormuz emptying

International Energy Agency· 29 Mar 2026

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Causes and effects

Caused by

Brent at $112 as Houthis join the war

Brent's 4.22% surge to $112.57 reflects the compounding economic impact of Houthi entry into the conflict adding demand-side uncertainty.

Occurred 28 Mar 2026

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This Event

Brent at $112 as Houthis enter the war

Brent's 51% monthly gain is the largest since the COVID recovery in mid-2021, and the Majlis Hormuz toll bill expected this week could convert the de facto closure into permanent law.

Led to

Brent above $116, set for record month

Brent at $112.57 on 28 March (ID:1695) advanced further to above $116 by 30 March, driven by Trump's oil seizure statement and the third consecutive Houthi attack on Israel.

Occurred 30 Mar 2026

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Different Perspectives

Asian buyers (India, Japan, China, South Korea)

Asian refiners are absorbing 62% of Yanbu's 3.75m b/d flow, the bulk of Saudi Arabia's rerouted crude now clearing east rather than into the Atlantic basin. That destination split leaves Asian buyers more exposed to any single Yanbu-specific disruption than under the kingdom's normal multi-terminal export pattern.

Russia / Lukoil

Moscow loses the roughly $14-a-barrel legal headroom the frozen price-cap formula would otherwise have released toward $58, even as Urals trades below Russia's own $59 budget floor. The shadow-fleet insurance workaround the freeze leaves untouched remains the actual route sanctioned crude clears above $44 in practice.

European Union / Council

Brussels adopted its 21st sanctions package on 23 July, letting boarding states confiscate and sell shadow-fleet cargo outright and freezing the G7 price cap's automatic adjustment to mid-2027, converting indefinite tanker storage into recoverable value for enforcers.

Freight and tanker desks

The Baltic Exchange's TD3C VLCC benchmark, most desks' reference for Gulf freight, prices a single-vessel voyage while Saudi shippers now pay for two Suezmax charters at roughly double the transit time. That gap leaves any book hedged purely on TD3C carrying unrecognised Suezmax basis risk on the bulk of Saudi rerouted volume.

Mediterranean refiners (Sines, Trieste, Augusta)

Refiners already facing aframax rates up 198% month-on-month now watch Ain Sokhna draw 23% of Yanbu's rerouted crude through the same SUMED corridor they lean on for product backfill. Fujairah and ARA stocks near record lows leave little room to absorb a thinner Suez product flow.

Saudi Arabia

Riyadh has rerouted its entire western-coast crude book through Yanbu and Suez since the 23 July Bab el-Mandeb embargo, absorbing a roughly $2m-per-voyage Suezmax premium on every diverted cargo. The kingdom's fiscal breakeven near $108 a barrel makes that freight cost, not the blockade itself, the more durable drag on export economics.