Houthis Fire First Salvo at Israel, Oil Surges Past $100 as the War Expands to a Second Front

Oil markets jolted sharply higher on Sunday after Yemen's Houthi militants launched their first missile strike against Israel since the U.S.-Israeli war against Iran began in late February — an escalation that analysts warn could open a devastating second chokepoint on global energy trade just as the world was already absorbing the near-total closure of the Strait of Hormuz.

West Texas Intermediate crude surged 5.46% on Friday to close at $99.64 per barrel, while international benchmark Brent crude gained 4.22% to settle at $112.57 — its highest closing price in more than three years. By Sunday, following news of the Houthi attack, prices were pushing higher in thin early Asian trading.

A Conflict That Just Got Bigger

The Houthi military spokesman Yahya Saree announced the strike on X, saying the "Yemeni Armed Forces have carried out the first military operation using a barrage of ballistic missiles targeting sensitive Israeli military sites." Saree framed the attack as solidarity with Iran's regime and Hezbollah forces still fighting in Lebanon. The Israel Defense Forces confirmed it had "identified the launch of a missile from Yemen towards Israel" and said aerial defenses intercepted the threat. Within 24 hours, the Houthis announced a second attack.

The timing is significant. The Iran war, now entering its second month, began with U.S. and Israeli airstrikes against Iranian targets on February 28. Since then, the Strait of Hormuz — through which roughly 20% of the world's daily oil supply transited before the conflict — has been effectively shut down by Iranian forces. That single chokepoint has already triggered a historic supply shock. Goldman Sachs previously labeled it the largest oil supply disruption in recorded history.

Now, markets are confronting the prospect of a second chokepoint: the Bab el-Mandeb Strait, separating the Arabian Peninsula from the Horn of Africa, through which ships must pass to access the Red Sea and Suez Canal.

The Bab el-Mandeb Risk

According to U.S. Energy Information Administration data, the Bab el-Mandeb Strait accounted for 12% of global seaborne oil trade and 8% of liquefied natural gas trade in the first half of 2023. If the Houthis were to close or seriously threaten that waterway — as they did during their Red Sea campaign earlier in 2024 and early 2025 — the compounding effect on global trade flows would be severe.

Danish shipping giant Maersk, widely watched as a barometer of global trade health, confirmed on Saturday that it had already paused future trans-Suez sailings through the Bab el-Mandeb until further notice, citing the deteriorating security situation. Maersk also disclosed an incident at the Port of Salalah in Oman, where drone activity caused a terminal crane to sustain damage and a port worker was lightly injured. Operations at Salalah were suspended for approximately 48 hours.

"We are pleased to confirm that all Maersk crew are safe and accounted for and no Maersk vessels or cargo have been affected," the company said in a statement.

Salalah is a major transhipment hub for container shipping between Asia and Europe. Any sustained disruption there would push container freight costs higher at a moment when petrochemical-linked inflation — plastics, fertilizers, packaging — is already biting into consumer prices globally.

Trump's Pause Fails to Soothe Markets

President Donald Trump complicated the diplomatic picture last week by announcing a 10-day extension for Iran to open the Strait of Hormuz, with the U.S. pledging to pause attacks on Iran's energy infrastructure through April 6. Trump said on social media that talks with Iran were "going very well," but the market reaction told a different story: oil posted its largest weekly gain in months.

The unresolved ambiguity about Washington's strategic endgame — whether it seeks a full Iranian surrender, a managed reopening of Hormuz, or regime change — has become its own risk premium embedded in energy prices. Analysts at CNBC's Investing Club wrote Sunday that "the problem for investors is we don't know how Trump wants the Iran war to end," noting the S&P 500 is likely to see further declines in the absence of a clear resolution.

Indonesia: In the Crossfire of a Double Chokepoint

For Indonesia, the arithmetic is particularly painful. The country imports roughly 500,000 barrels of oil per day, and its state-owned energy company Pertamina has been scrambling to secure alternative routing since Hormuz effectively closed. A Bab el-Mandeb blockade would force tankers onto the far longer Cape of Good Hope detour, adding weeks to journey times and hundreds of millions of dollars in freight costs.

The rupiah, which has already shed around 6% against the dollar since the war began, faces renewed pressure. Bank Indonesia is expected to hold its benchmark rate steady at its next meeting, but mounting imported inflation from oil and petrochemicals could force its hand before mid-year.

The Jakarta Composite Index (IHSG), which fell sharply in early March on a combination of oil shock fears, rupiah weakness, and fiscal deficit anxiety, will be watching Monday's Asian open closely. Regional peers South Korea and the Philippines have already launched emergency bond buyback operations and surprise rate meetings in recent weeks to stabilize sentiment.

The Week Ahead

The three macro forces converging this week — the Iran war, Friday's U.S. nonfarm payrolls report, and Nike earnings as a Club holding — will set the tone for global markets into the second quarter. Jobs data will be critical: any sign of labor market softening combined with 4%+ oil-driven inflation puts the Fed in a nearly impossible position. Futures markets have already priced out any rate cuts in 2026, with a small but growing camp pricing in a hike.

With the Houthis now formally in the conflict, the war has taken on a geographic scale that no single diplomatic initiative can easily contain. Oil traders are betting the situation gets worse before it gets better — and at $100 a barrel, they may still be underpricing what a double chokepoint world actually looks like.