The situation in the Middle East escalated further this week. Two gas tankers in Egypt's Damieta port were attacked by drones on Wednesday; the US military launched a large-scale airstrike on dozens of targets in Iran on Thursday; the Iranian Revolutionary Guard retaliated against US targets in Jordan, Bahrain, and Kuwait; and the Houthi rebels in Yemen launched coordinated attacks on Saudi oil facilities from Iraq. The conflict has spread from the Persian Gulf to the Mediterranean, posing a systemic risk to global energy shipping routes. However, Saudi Arabia's announcement of a multinational maritime defense alliance aimed at protecting international shipping and energy supply routes in the Red Sea region slightly eased concerns about supply disruptions. On Friday (July 31), international oil prices weakened slightly, with US crude oil currently trading around $82.90 per barrel, down about 0.8%.

I. Attack on Egyptian Port: The First Time the Flames of War Reach the Mediterranean

On the afternoon of July 29, 2026, an explosion occurred at the port of Damieta on Egypt's Mediterranean coast. Two cargo ships docked at a liquefied natural gas (LNG) terminal caught fire after being attacked by a drone. The Egyptian Ministry of Petroleum and Mineral Resources confirmed the incident that day, and emergency response teams quickly responded; no casualties were reported. According to the British maritime security company Ambrey, the attacked vessels were a US-owned LNG storage and regasification vessel and a Greek-owned oil tanker. Multiple trade sources confirmed to Reuters that a drone struck the floating storage and transportation vessel "Energos Winter," owned by the US company "Energos Infrastructure," and the fire subsequently spread to nearby Greek vessels. The affected ships were later moved outside the port area. On July 30, the Egyptian government officially confirmed that preliminary investigations indicated the fire was caused by an "unidentified drone" attack. As of now, no organization has claimed responsibility for the attack. The Houthi rebels in Yemen have officially denied involvement, stating that the related rumors are "completely unfounded." Two Iranian sources told The New York Times that the attack was intended to demonstrate that "if Iran chooses to escalate the conflict, global shipping and energy supplies could suffer far more profound disruptions." US President Trump said the same day that he had been briefed on the matter, implying that Iran should be held responsible. The port of Damieta is located on a tributary of the Nile Delta, adjacent to the Mediterranean Sea, and not far from the Suez Canal's outlet. This marks the first time since the start of the US-Iran war in February 2026 that the conflict has reached Egypt, signifying that the conflict has spread from the Persian Gulf to the Mediterranean coast.

II. Large-scale US airstrikes on Iran: Dozens of targets struck

Hours after the attack on the Egyptian port, the U.S. military resumed large-scale airstrikes against Iran in the early hours of July 30, Iranian time. This followed a brief pause in attacks on Iran starting July 24. U.S. Central Command stated that within two hours, U.S. forces struck "dozens" of Islamic Revolutionary Guard Corps targets within Iran, including military command centers, missile and drone facilities, and coastal surveillance and defense outposts. The operation aimed to "further weaken the threat posed by Iran and its proxies to U.S. forces, merchant ships, and neighboring Gulf states." According to Iranian media reports, the U.S. attacks covered parts of Hormozgan province, including Qeshm Island and Kish Island in the south, as well as several cities in Khuzestan province in the southwest and three cities in Bushehr province—including Bushehr, home to Iran's only civilian nuclear power plant. Iranian Foreign Ministry spokesman Bagaei condemned the U.S. attack on a residential area on Qeshm Island on the evening of July 30, which resulted in the deaths of a family of five, including parents and their two-year-old child, and damage to several homes. Iranian state media also reported that three members of the Revolutionary Guard Corps in Zanjan province were killed in the airstrikes. The Wall Street Journal, citing sources familiar with the matter, reported that U.S. Central Command Commander Cooper has proposed a 10- to 14-day punitive air strike plan aimed at significantly weakening Iran's missile capabilities, which is awaiting approval from President Trump.

III. Iran launches a full-scale counterattack: Jordan, Bahrain, and Kuwait are attacked in succession.

The Iranian Revolutionary Guard Corps (IRGC) swiftly retaliated. On July 30, the IRGC announced the launch of multiple ballistic missiles, attacking a US military base in Azraq, Jordan. The IRGC claimed to have "completely destroyed" three F-35 fighter jets and "severely damaged" three others. US Central Command denied this, stating that "all missiles and drones were intercepted or failed to reach their target areas," and that "no US aircraft were destroyed or damaged." The Jordanian military had previously stated that it had intercepted five Iranian missiles. On the evening of July 30, the Iranian military further expanded its strikes, using drones to attack generators, navigation systems, and administrative and logistical facilities at the US Sheikh Isa Air Base in Bahrain. Iran stated that despite the deployment of multiple air defense systems and enhanced protection by the US military at its Middle East bases, the continued attacks by Iranian armed forces have caused significant damage to related equipment and military facilities. Sheikh Isa Air Base is a key US military base in the Gulf region and a center for the deployment of reconnaissance aircraft and the maintenance and support of helicopter and drone parts. In addition, Iran's semi-official Tasnim News Agency reported that the Revolutionary Guard also attacked US assets at the Ali Salem Air Base in Kuwait. The Kuwaiti Ministry of Defense stated that an attack struck a building owned by a Chinese company in northern Kuwait, resulting in the death of one worker and significant damage.

IV. Houthi rebels launched coordinated attacks on Saudi Arabia from within Iraq.

Saudi Arabia has intervened directly in the conflict for the first time with open military action. On July 29, Saudi Arabia and the US jointly launched airstrikes against multiple targets of pro-Iranian armed groups in Iraq. The Iraqi Shiite militia group Popular Mobilization Forces (PMF) claimed that several of its bases were attacked, resulting in at least 20 deaths and 32 injuries. The Iraqi presidential palace condemned the action as a "blatant violation of Iraqi sovereignty." The immediate trigger for this joint operation was the continued drone attacks on oil facilities in Saudi Arabia's eastern provinces, originating from Iraq. However, according to two regional officials who spoke to Reuters, the Houthi rebels in Yemen were actually involved in the attacks on Saudi Arabia from within Iraq and coordinated with Iraqi armed groups. These attacks were directed and monitored by the Iranian Islamic Revolutionary Guard Corps. This is the first time Saudi Arabia has openly conducted joint military strikes with the US since the conflict began in late February 2026. Saudi Defense Minister Khalid bin Salman, during a meeting with US Vice President Vance in Washington, stated that the Saudi Crown Prince wanted to convey the message that the strikes in Iraq "do not mean that Saudi Arabia is advocating for escalation, but rather that Saudi Arabia is prepared to defend itself if necessary." Sources say Saudi Arabia intends this as a warning to Iran that it will not allow Iran or its proxies to attack key Saudi oil facilities, while urging de-escalation. Analysts point out that with the fall of the Assad regime in Syria and the significant weakening of Hezbollah in Lebanon, Iraq is gradually becoming a key node in Iran's "resistance axis" network. Chatham News researcher Farea al-Muslimi stated, "Today, direct training and coordination mechanisms have been established among members of the resistance axis, rather than just connections between them and Iran."

V. Strait of Hormuz and Suez Canal: Two Major Shipping Gateways Under Pressure

Iran continues to strengthen its control over the Strait of Hormuz. On July 30, Iran stated it had struck three oil tankers attempting to transit the strait via unauthorized routes. Iranian officials had previously rejected Oman's proposal for joint management of the strait, insisting that the entire inbound route and part of the outbound route must be controlled by Iran. The Iranian Revolutionary Guard claims "complete control" over the strait. However, a liquefied natural gas (LNG) carrier belonging to Qatar Energy departed the Strait of Hormuz on the night of July 30, the first such vessel to leave the waterway since July 11. Iran's Fars News Agency reported that Tehran had approved its passage. Iran's semi-official ILNA News Agency quoted Foreign Ministry spokesman Bagai as saying that negotiations regarding the Strait of Hormuz are ongoing. The strategic importance of the Suez Canal is rapidly increasing. Due to the obstruction of the Strait of Hormuz, Saudi Arabia is forced to transport more crude oil northwards via the Red Sea to the Suez Canal. Market intelligence firm Kpler data shows that an increasing number of Saudi crude oil and other cargo ships are instead heading north along the Red Sea to the Suez Canal and the Sumaid pipeline. However, the attack on Damieta port cast a shadow over this last alternative route. The Houthi rebels announced a maritime blockade of Saudi Arabia on July 20. On July 23, the Houthis attacked two Saudi oil tankers in the Red Sea using ballistic missiles, cruise missiles, and drones. The London marine insurance market has subsequently expanded its "high-risk" zone in the Red Sea to include more coastlines adjacent to Saudi ports. A research report from Guolian Minsheng Securities pointed out that "the closure of the Strait of Hormuz is a historic first," and the conflict's spread to the Bab el-Mandeb Strait has created a "dual-strait crisis." Goldman Sachs analyzed three oil price scenarios: in the baseline neutral scenario, Brent crude oil is expected to reach $80 in the fourth quarter of 2026; in the extreme upside scenario, if the Strait of Hormuz closure continues into 2027, Brent crude could break through $120 in the fourth quarter.

VI. Saudi Arabia leads 43 countries in forming Red Sea Maritime Defense Alliance

In response to the deteriorating security situation in the Red Sea, Saudi Arabia convened a large-scale international conference in Riyadh on July 30. The Saudi Ministry of Defense stated that representatives from 43 countries and the European Union attended the meeting to discuss the formation of a multinational maritime defense coalition. Following the meeting, 14 countries, including Saudi Arabia, Kuwait, Bahrain, Qatar, Pakistan, Turkey, Egypt, Jordan, Yemen, Bangladesh, Nigeria, Sudan, Djibouti, and Somalia, issued a joint statement supporting the coalition proposal. Saudi Arabia will serve as a founding and leading country and will be responsible for establishing the coalition headquarters. According to the statement, the coalition is a defensive framework aimed at strengthening maritime security, ensuring freedom of navigation, securing international trade routes and energy supply lines, and protecting shared maritime interests in the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden. Each member state will decide independently whether to participate in specific actions based on its own laws. Of the six Gulf states, Oman and the United Arab Emirates did not participate in signing the statement. The Houthi rebel leader has warned of a "full escalation" in response.

VII. Market Impact: Oil prices fluctuated at high levels, leading to a surge in supply chain costs.

On July 30, the international crude oil futures market experienced significant volatility. Brent crude oil futures for September delivery surged to $93.31 during the session due to the US-Iran military strikes, ultimately settling at $89.03. US WTI crude oil futures for September delivery reached a high of $85.94 during the session, settling at $83.59, a drop of approximately 1%. US crude oil continued its decline in Asian trading on Friday, currently trading around $82.90 per barrel, a drop of approximately 0.8%. Market analysts believe that after the early morning rise, investors shifted their focus to Saudi Arabia's proposal to form a maritime coalition, leading to a slight decrease in geopolitical risk premiums. The latest data from the US Energy Information Administration shows that US crude oil inventories fell sharply by 7.167 million barrels last week, far exceeding market expectations of 1.272 million barrels, with total inventories now 7% below the five-year average. Affected by the Iranian conflict pushing up gasoline prices, the Trump administration plans to restart several closed refineries. A research report from Huayuan Securities points out that the geopolitical situation in the Middle East has reached a crossroads, benefiting the oil shipping market in every way. The closure of the Strait of Hormuz has led to a restructuring of global oil trade routes, with the shipping distance from the US Gulf Coast to Asia now 2.6 times that from the Middle East to Asia, significantly boosting demand per ton-mile. For Asian buyers, if the Suez Canal route is also threatened, ships will be forced to take longer voyages around Africa. Although the attack on Damieta Port did not directly target the Suez Canal, the head of energy research at consulting firm MST Marquee points out that the potential risks facing this shipping choke point have exacerbated market concerns.

Editor's Summary

This week, geopolitical risks in the Middle East spilled dramatically from the Persian Gulf to the Mediterranean. The attack on the Egyptian port of Damieta marked the first time the conflict had reached Egyptian territory, directly threatening the Suez Canal, one of the world's busiest shipping lanes. The US launched large-scale airstrikes against dozens of targets within Iran, while the Iranian Revolutionary Guard retaliated simultaneously on three fronts in Jordan, Bahrain, and Kuwait, significantly escalating the conflict. The Houthi rebels in Yemen coordinated attacks on Saudi oil facilities from Iraq, signifying a substantial increase in the cross-regional coordination capabilities of Iran's "axis of resistance." The Strait of Hormuz is effectively under Iranian control, and the Red Sea is facing heightened risks due to the Houthi blockade, putting pressure on both major shipping chokepoints. Saudi Arabia has urgently spearheaded a 43-nation Red Sea maritime defense coalition, but its effective operation and the actual deployment of troops by member states remain highly uncertain. If the security situation in the Suez Canal continues to deteriorate, the global energy supply chain will face its most severe test since the 1973 oil crisis. Goldman Sachs warned that if supply disruptions through the Strait of Hormuz persist, Brent crude oil prices could exceed $120 in the fourth quarter. However, the market is also influenced by easing signals such as Saudi Arabia forming a maritime escort coalition and Qatari LNG ships being allowed passage. In the short term, oil prices will remain highly volatile between geopolitical risk premiums and expectations of diplomatic mediation.

Frequently Asked Questions

Q1: Why is the attack on Damieta Port so important? What does it mean for the global energy market? Damieta Port is located on Egypt's Mediterranean coast, adjacent to the Suez Canal's outlet. This attack marks the first time the conflict has reached Egypt since the start of the US-Iran war in February 2026. Because the Strait of Hormuz is effectively controlled by Iran, Saudi Arabia has been forced to ship more crude oil northwards via the Red Sea to the Suez Canal. The attack on Damieta Port means that even this last alternative route to the Suez Canal is under security threat. If the Suez Canal route is blocked, Asian buyers will be forced to take longer routes around Africa, drastically increasing transportation time and costs. Goldman Sachs warns that if the disruption of the Strait of Hormuz continues until 2027, Brent crude oil could break through $120 in the fourth quarter. Q2: What is Iran's "Axis of Resistance"? Why were the Houthi rebels able to attack Saudi Arabia from within Iraq? The "Axis of Resistance" is a network of proxies that Iran has built in the Middle East, including Hezbollah in Lebanon, the Houthi rebels in Yemen, and Shiite militias in Iraq. With the fall of the Assad regime in Syria and the weakening of Hezbollah, Iraq is becoming a key node in this network. According to regional officials, the Houthi rebels have established a direct coordination mechanism with Iraqi armed groups, with some attacks being jointly carried out by both sides within Iraq and under the command and supervision of the Iranian Revolutionary Guard. A Chatham News Agency researcher pointed out that "direct training and coordination mechanisms have been established among the members of the resistance axis, rather than just their connections with Iran." This has further blurred the geographical boundaries of the conflict, significantly increasing the difficulty of defense for countries like Saudi Arabia. Question 3: How many casualties did the US airstrikes on Iran cause? Why is there such a large discrepancy between the two sides' accounts? The US military carried out airstrikes on "dozens" Revolutionary Guard targets in Iran in the early hours of July 30. Iranian reports stated that a family of five, including parents and a two-year-old child, died on Qeshm Island, and three Revolutionary Guard members were killed in Zanjan province. Regarding the effectiveness of the counterattack, the two sides gave diametrically opposed accounts: the Iranian Revolutionary Guard claimed to have destroyed three F-35 fighter jets at a US military base in Jordan and severely damaged three others; the US Central Command stated that "all missiles and drones were intercepted or failed to reach the target area," and that "no US aircraft were destroyed or damaged." Such discrepancies in information are common in wartime, with both sides serving their own propaganda and morale needs, making independent verification difficult for outsiders. Question 4: Can the Red Sea maritime defense coalition formed by Saudi Arabia effectively protect shipping? On July 30, Saudi Arabia convened representatives from 43 countries and the EU to discuss the formation of the coalition, with 14 countries issuing a joint statement in support. The coalition aims to protect shipping safety in the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden. However, the effectiveness of the coalition faces multiple challenges: First, each member state decides independently whether to participate in specific operations based on its own laws, meaning there is uncertainty regarding the actual troop deployment; second, Oman and the UAE, two key Gulf states, did not participate in the joint statement; third, the Houthi rebels have warned of a "full escalation" response. The political signal significance of this coalition outweighs its short-term combat effectiveness; its real test lies in whether member states can fulfill their commitments in times of crisis. Question 5: What is the potential impact of this conflict on the global economy and inflation? The current conflict has simultaneously threatened two major energy chokepoints: the Strait of Hormuz and the Bab el-Mandeb Strait. The Strait of Hormuz handles nearly 30% of global oil shipping, while the Red Sea-Suez Channel carries over 80% of the cargo volume on the Asia-Europe route. Guolian Minsheng Securities stated that "the closure of the Strait of Hormuz is unprecedented in history." US crude oil inventories have fallen to 7% below the five-year average. If both channels are blocked simultaneously, the global energy supply chain will face the risk of systemic disruption. Goldman Sachs predicts that Brent crude oil could break through $120 in an extreme scenario. Sustained high oil prices will be transmitted to global inflation through both transportation costs and energy prices, posing a significant downside risk to the recovering global economy. As of 09:25 Beijing time, US crude oil is trading at $82.91 per barrel.