Saudi Oil Backup Route Now Blocked: July Fed Hike Odds Jump to One-in-Three

Saudi Arabia’s oil export backup route is now blocked after a Houthi naval blockade forced an escalation around Bab el-Mandeb in the Red Sea. The Houthis attacked two Saudi oil tankers, Encelia and Layla, on Thursday, firing ballistic missiles and drones and stating the vessels violated a blockade of Saudi ports declared earlier in the week. This cut off the alternative route Riyadh used after disruptions to the Strait of Hormuz earlier in 2026, leaving Saudi crude with no viable exit mentioned in the report. Brent crude crossed $100 per barrel for the first time since late May, and CME FedWatch data as of July 23, 2026 showed the odds for a July 29 decision shifting to a near one-in-three chance of a 25-basis-point hike. The probability was 36.5% for a hike and 63.5% for a hold within the 3.50%-3.75% target range, reflecting geopolitical shock and persistent inflation above target.