Global oil prices could surge to $140 per barrel if Houthi rebels target shipping in the Red Sea, potentially worsening what is already considered the largest energy disruption in history, according to a report by Bloomberg Economics.
Analysts Dina Esfandiary, Ziad Daoud, and Becca Wasser estimate that such an escalation would drive up inflation, weaken global growth, and force a larger share of consumer spending toward energy costs. The report suggests that Houthi intervention would exacerbate a volatile situation where a fifth of global energy flows are already disrupted by the war with Iran, which has pushed oil prices above $110 and forced reliance on Saudi Arabia’s East-West pipeline as a primary alternative route.
The research unit expects the Houthis to escalate attacks if the United States takes steps constituting a major escalation—including a ground operation in Iran—or if President Donald Trump carries out threats to strike Iranian infrastructure.
While the Houthis agreed to a ceasefire with the United States last year and limited themselves to intermittent ballistic missile and drone strikes against Israel, they have recently shown signs of renewed activity. On March 28, the group launched a missile at Israel, marking a return to operations after a period of reorganization following a US bombing campaign between March and May 2025. That campaign targeted more than 1,000 sites in Yemen, weakening the group’s infrastructure and capabilities.
The conflict has entered a new phase as Iran maintains a “stranglehold” on the Strait of Hormuz. Bloomberg Economics notes that the Houthis may have been waiting to maximize their impact, with the shift of oil shipments to the Red Sea providing that opportunity. Saudi crude exports through the Red Sea have risen to 5m barrels per day. If these flows are disrupted, the world could lose an additional 5% of its current oil consumption.
The report outlines three potential paths for Houthi action:
- Show of force:Using single attacks or drone harassment to intimidate commercial shipping and reroute trade.
- Attacking commercial vessels:Resuming tactics used during the Gaza war, where the group launched over 315 attacks. Although only 18% caused damage, it was sufficient to divert shipping.
- Targeting warships:Directly attacking US and allied naval vessels. Between November 2024 and January 2025, US forces shot down approximately 480 Iranian-made Shahed drones.
The financial cost of defence remains a critical factor. While Houthi attacks have not resulted in direct US casualties, the use of inexpensive drones has forced the United States to deplete billions of dollars worth of limited air-defence missiles. Renewed attacks would further strain ammunition stockpiles and naval resources, including destroyers needed for missile defence.
The economic fallout of a Red Sea disruption would be significant. Bloomberg Economics’ modelling, based on past case studies and market movements, suggests that crude prices rise by approximately four times the volume of the supply disruption. From a baseline of $115 per barrel, a 20% increase would move Brent crude toward $140.
Current estimates indicate that inflation in major economies has already risen by an average of 0.4 percentage points since the start of the war due to energy costs. Some projections suggest that if the Strait of Hormuz remains closed for eight weeks, oil prices could reach $200.
The report concludes that while the Houthis are allied with and supplied by Tehran, they do not simply follow orders. While the group feels a necessity to defend the population of Gaza, these sentiments do not necessarily extend to Iran, making further intervention more difficult to justify unless a major escalation occurs.
