The two blazing tankers in the Bab el-Mandeb Strait have come for Saudi Arabia's shipping lanes, which it has been trying to stay out of for weeks, months and years through missile exchanges with Tehran and Washington.

The Houthis, the Yemeni rebels in charge of control of the Sanaa port, said on Thursday that they had hit two Saudi-backed oil tankers, Encelia and Laylia, after both had violated a naval blockade the movement declared against the kingdom earlier in the week. According to the Saudi state media the fire broke out near the bow of the Encelia and the crew escaped without any injuries, the symbolism did not land on its feet. The Gulf monarchies, which have sought to remain neutral in this current conflict for the first time have their own energy exports targeted.

It's a terrible time for markets. Early Thursday trading, Brent crude hit its highest price in about two months, extending a rally that has seen prices climb toward a fifth in two weeks and more than 30 percent since the start of July. WTI was next, closing at $90.99. The strikes by the tankers are a "serious escalation," said analysts at ANZ, who suggested the current squeeze on crude supply, which is already severe, may worsen further before it improves. It was a widely held opinion around trading desks: Saudi Arabia had been diverting a few million barrels per day of crude oil away from the Strait of Hormuz to its port of Yanbu on the Red Sea, where Iran had been harassing shipping, to avoid it. When the Houthis can now threaten to do the same, the kingdom has no workaround, and the world loses one of the last reasonable pressure valves in the oil geography of the region.

That's already evident in the mechanics of the squeeze. Data from shipping firms indicate that at least two tankers have been diverted from the strait of Bab el-Mandeb instead of risking passage as two Chinese owned very large crude carriers filled with a combined four million barrels of Saudi oil continued on their way. The insurance markets have responded in an equally strong manner. Since the blockade was declared, the war-risk premiums for ships sailing through the Red Sea have also increased by approximately threefold, from 0.3 percent of the insured value to nearly 0.75 percent. On a $100 million tanker, that isn't a significant cost difference it's several hundred thousand dollars per week, and similar premiums related to the Strait of Hormuz, brokers note, have sometimes been much higher. If the southern Red Sea route is completely shut down, shippers will have just the long, expensive route north through the Suez Canal, which adds weeks to their already long voyages, and higher freight and insurance prices.

All of this is not happening in isolation. The tanker strikes arrived hours after the U.S. conducted air strikes on Iranian territory for its 12th night in a row, claiming to damage maritime facilities, missile and drone storage, coastal radar and air defense systems designed to target shipping.They followed the U.S. air strikes on Iranian territory for its 12th straight night, which Central Command said it had damaged maritime facilities, missile and drone storage facilities, coastal radar and air defenses to target shipping. In response, Iran has retaliated by attacking American-backed bases in neighboring Kuwait and Jordan with drones and missiles, alleging damage to a THAAD radar installation, damage to a Patriot battery and other equipment, and Iranian media claiming that American missiles attacked the Bushehr nuclear plant and a border town near Iraq. Jordan has said it has downed four missiles and four drones, while the military in Kuwait said it downed hostile drones overnight and the air-raid sirens were activated in Bahrain. Iranian authorities now report 53 dead and almost 600 wounded since late June, while the conflict has left 18 U.S. servicemembers dead and more than 450 wounded the gravity of which prompted President Trump to attend a ceremony this week at Dover Air Force Base for four of the casualties.

This moment differs from the larger five-month war insofar as it's no longer a struggle over Iran's nuclear or missile facilities but a conflict that's now affecting the veins of world commerce. In normal times, around 10% of world seaborne oil transits through the Bab el-Mandeb passage and a significant proportion of Saudi exports to India and China pass through the same waters the Houthis say they are guarding. Any continuation of that can not only increase pump fuel prices from Rotterdam to Chennai, but will feed through into the costs of manufacturers, freight bills for retailers, and central banks' inflation objectives, who had just declared the end of post-pandemic inflation. Even regional players without a direct interest in the current US-Iran tensions seem to realise how fast this could get out of hand, as Oman reportedly has been behind the scenes to broker peace between Riyadh and the Houthis.

So far, the Israeli government has not been drawn into the renewed fighting, respecting the ceasefire accord it never formally signed, but has decided not to breach. At the same time, however, Washington is also strengthening economic relations with Saudi Arabia through a new civil nuclear deal and is fighting a war a couple of hundred miles away, a discrepancy that highlights the diverse interests of each of the parties at the table. The Houthis have demonstrated that they can disrupt oil markets without taking a shot at an American target, twice with their burning tankers. Could it be a negotiating tool to de-escalate or a catalyst to spread a wider maritime conflict? It is the most critical question this summer on the energy markets' table.