Fears are mounting of a fresh global oil supply crisis after Houthi rebels seized the strategic Red Sea islands of Greater and Lesser Hanish, adding to disruption caused by an attack on a major Saudi pipeline. The escalation matters because it threatens both Saudi Arabia's ability to export oil via the Red Sea and freedom of navigation through the Bab el-Mandeb Strait, a critical global shipping chokepoint, at a time when supplies are already under strain from the wider regional conflict and Ukrainian strikes on Russian refineries.

Brent crude rose 1.17% to $106.92 a barrel, while US diesel prices topped $6 a gallon for the first time, as Saudi Arabia's 1,200km East-West Pipeline remained shut following a drone attack blamed on Iranian-backed militias, with repairs expected to take three to five weeks and up to four million barrels a day at risk. The Houthis, having already taken Mokha and Mayun island, met little resistance in capturing the Hanish islands, bringing them within 20 miles of a US base in Djibouti, while daily missile and drone attacks — including one wounding 13 civilians — have kept Saudi Arabia on high alert as government forces attempt counter-strikes.