In the United States, average gasoline prices have climbed above $4 per gallon|risingthermals|CC BY-NC 2.0

Global oil prices climbed above $100 a barrel for the first time since May after the worsening conflict in the Middle East renewed fears of supply disruptions.

The Iran-backed Houthi militia in Yemen said yesterday that it attacked two Saudi oil tankers near the Bab el-Mandeb Strait, a vital shipping route for Saudi crude shipments diverted from the blocked Strait of Hormuz. The incident fueled concerns over supply disruptions, pushing oil prices.

The latest rally erased earlier declines that followed a temporary US-Iran ceasefire, which has since collapsed.

The attack has markets grappling with the possibility of a prolonged disruption to another vital Middle Eastern trade route. Saudi Arabia has alternative export routes through the Suez Canal, but rerouting shipments would extend transit times and increase costs for vessels carrying crude to Asian markets.

Fuel costs rise
The sharp increase in crude prices is already affecting consumers. In the United States, average gasoline prices have climbed above $4 per gallon, up from $3.92 a month ago, according to AAA. 

Higher oil prices are also increasing transportation, manufacturing and food costs worldwide, raising concerns that inflation could remain elevated for longer.

Rising oil prices have also driven bond yields up in recent days, reflecting growing expectations that the Federal Reserve may keep interest rates higher for longer or raise them further.

At the same time, the US emergency oil reserve has dropped to its lowest level since 1983.

UN sounds alarm
Meanwhile, the regional conflict continues to intensify. UN Secretary-General António Guterres warned that the situation is “getting out of control” as fighting intensifies across the region.

His warning came as the United States carried out airstrikes on Iranian targets for a 12th consecutive night, while President Donald Trump said he was considering a “massive attack” on Iran.

Countries respond to growing risks
The escalating crisis has prompted several countries to take preventive measures. The UK has temporarily withdrawn diplomatic staff from Iran, Germany has redeployed two naval vessels from the Red Sea, and the US has warned Americans in the region that commercial flights could face disruptions.