Brent crude crossed $100 a barrel on Thursday morning for the first time since May. At 9:15 a.m. Eastern, the September contract traded at $100.05, up 6.4 percent from the prior close. WTI rose 7.3 percent to $93.15. Abu Dhabi's Murban crude surged 19 percent to $106.60.
The trigger was two Saudi oil tankers. Yemen's Houthi forces said they struck the Encelia and the Layla with drones and missiles in the Red Sea, accusing both of violating the group's naval blockade against Saudi Arabia. One carried crude destined for India. The other was bound for China.
The Formula
On Tuesday morning, President Trump posted on Truth Social: "From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran."
Iran said it would retaliate against infrastructure and energy assets across the region. The U.S. had already completed its 12th consecutive night of strikes on Iranian military installations. Iran has attacked more than 30 commercial vessels since April.
The June memorandum of understanding between Washington and Tehran was supposed to define an open strait. It lasted nine days. The two sides agreed on the word "open" but not on what it meant. Washington read unrestricted transit. Tehran read coordinated transit. Permission required. On June 25, an IRGC drone struck the Singapore-flagged MV Ever Lovely exiting the strait. By early July the framework was finished.
Both Exits
Saudi Arabia redirected over 70 percent of its crude exports to the Red Sea port of Yanbu after Hormuz became contested, shipping via the 1,200-kilometer Petroline pipeline built in 1981. The pipeline runs from Abqaiq on the eastern coast to the western coast, bypassing the strait entirely.
The Houthis just hit the bypass.
Saudi crude now faces fire at both exits. Iran contests Hormuz directly. Iran's proxy contests Bab el-Mandeb. The pipeline that was built as insurance against one chokepoint delivers its cargo into the other.
The Price Sheet
Murban crude is priced in Abu Dhabi and shipped through Hormuz. Its 19 percent surge on Thursday against Brent's 6.4 percent is the Hormuz tax in real time, levied barrel by barrel on every cargo that transits the strait.
Brent has gained 36 percent in the past month. Goldman Sachs warned Monday that prices could exceed $120 by the fourth quarter if disruptions persist. The bank estimates Persian Gulf flows have fallen below 45 percent of pre-war levels. A full closure would remove 15 to 20 million barrels a day from the market, the largest supply disruption in the history of the oil trade.
The president's formula publishes the exchange rate. One ship, one bridge. Iran can calculate whether each bridge is worth one tanker. Every trading desk can model the next round before it starts.
Oil crossed $100 the morning after the formula was posted. A published exchange rate is a price sheet. And price sheets get filled.