Brent crude oil hits $100 per barrel amid Middle East fighting

Brent crude oil hits $100 per barrel amid Middle East fighting

Brent crude oil jumped 7.1% to $100.74 on Thursday, July 23, 2026, reaching its highest price since May. The surge follows attacks by Iran-backed Houthi rebels on two Saudi oil tankers in the Red Sea, threatening a critical transit route for global crude flow alongside the Strait of Hormuz.

The escalation has rattled Wall Street. The S&P 500 sank 1.3%, while the Dow Jones Industrial Average fell 537 points, or 1%, as of 12:50 p.m. Eastern time. The Nasdaq composite dropped 2.2%. These declines were fueled by rising energy costs and sharp losses for Alphabet and Tesla. Tesla tumbled 14% after reporting weaker quarterly profits than analysts expected, while Alphabet fell 6.7% despite stronger profit and revenue reports, as investors focused on the company's increased capital spending on artificial intelligence.

President Donald Trump has threatened major military punishment against the Houthi rebels if the attacks continue. This volatility comes after a period where Brent had dropped below $72 per barrel on hopes that the Strait of Hormuz would fully reopen following the start of the war between the United States, Israel, and Iran.

Strategic Reserves and Infrastructure Risks

The conflict has forced the U.S. To rely heavily on the Strategic Petroleum Reserve (SPR). According to U.S. Energy Information Administration (EIA) data, the SPR has declined from 415.4 million barrels on March 20, 2026, to 311.4 million barrels on July 17, 2026—a nearly 25% drain over 17 weeks. This is the lowest level for the reserve since March 1983.

The drawdown is a point of contention between administrations. White House spokeswoman Taylor Rogers stated that President Trump used the SPR to stabilize markets, claiming the Biden administration irresponsibly drained the SPR for political gain. Conversely, Steve Hanke, a professor at Johns Hopkins University, told the Daily Caller News Foundation that the U.S. caused its own emergency by starting a war of choice with Iran.

Beyond inventory levels, the U.S. Government Accountability Office (GAO) has reported that the SPR's aging infrastructure is in disrepair. Geotechnical advisors from Sandia National Laboratories found in 2024 that well deformations are outpacing the Department of Energy's (DOE) ability to reduce risks. DOE Under Secretary of Energy Kyle Haustveit noted that injecting fresh water to displace oil can dissolve the interior of the salt caverns, though he maintained that the DOE is monitoring levels to prevent structural damage.

Global Market Impacts

The oil shock is impacting multiple global sectors and regions:

• Aviation: American Airlines shares fell 8.4% and Southwest Airlines lost 4.4%, despite both reporting better-than-expected profits.
• Consumer Costs: AAA reported the U.S. National average for a gallon of regular gasoline at $4.09, up from $3.93 a month ago.
• International Markets: France’s CAC 40 dropped 1.6%. In contrast, South Korea’s Kospi jumped 4.4%.
• China: Reuters reported that China's crude oil imports fell to roughly 40% of prewar levels in June.
• India: In Banka, 14.2 Kg Domestic LPG prices remained stable at ₹1,039.50 as of July 18, 2026, though prices have risen from ₹950.50 in January 2026. Commercial LPG in the area is ₹3,414.50.

Economic Outlook

The price spike threatens to reverse the deceleration of inflation. Nigel Green, CEO of deVere Group, stated that Brent's jump past $100 threatens the fragile inflation progress the Federal Reserve was relying on. This may prompt central banks to raise interest rates. Data from CME Group shows the probability of the Fed hiking the federal funds rate at next week's meeting has risen to nearly 38%, up from nearly 12% a week ago.

The 10-year Treasury yield rose to 4.70% on Thursday, up from 3.97% before the war with Iran began, driving U.S. Mortgage rates to their highest levels in nearly a year.

The U.S. DOE expects the return of oil released during the coordinated 400 million-barrel IEA effort to begin in early 2027. Market participants now look toward the Federal Reserve meeting on July 29 for decisions on interest rates.