Houthi Advance Near Bab el-Mandeb Pushes Oil Above $100 as IEA Widens Supply Deficit Forecast

Houthi forces seized the Yemeni port city of Mocha after Saudi-backed government troops withdrew, then advanced south to Dhubab and Hisn Murad, giving them control over much of Yemen's Red Sea coastline and nearby islands. Reports indicated they captured U.S.-made military equipment left behind by retreating forces, with accounts of an entire battalion surrendering. The gains place Houthi forces in closer proximity to the Bab el-Mandeb Strait, a chokepoint that carries roughly 10-12% of global trade.

Oil prices crossed $100 a barrel as markets priced in the risk of renewed shipping disruptions, though prices slipped in early trading on September 11 after the previous session's surge as traders assessed the evolving situation. Reuters noted that Houthi activity in the area may represent additional downward pressure on a supply-constrained market.

The International Energy Agency's latest report added a structural backdrop to the price move. Global observed oil inventories fell by a further 95 million barrels in August, bringing cumulative draws since February to 507 million barrels, equivalent to 2.8 million barrels per day on average. Oil on water volumes dropped by 65 million barrels as tanker traffic out of the Middle East faced renewed attacks, while non-OECD stocks fell by 52 million barrels led by China. OECD commercial builds of 23 million barrels only partially offset a 19 million barrel draw in government stocks.

The IEA revised its 2026 supply-demand balance, now projecting total world oil supply will run 1.74 million barrels per day below demand, up from its prior forecast of a 1.27 million barrel per day deficit. The agency also cut its forecasts for Russian oil output following continued Ukrainian attacks on energy infrastructure, and warned that oil demand may need to fall further as the Iran war continues to drag on supply chains.