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Iran war spreads to Red Sea and Caspian, Gulf quiet as US forgoes strikes - Finance news and analysis from Global Banking & Finance Review
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Iran war spreads to Red Sea and Caspian, Gulf quiet as US forgoes strikes

Published by Global Banking & Finance Review

Posted on July 25, 2026

4 min read

· Last updated: July 26, 2026

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Iran war spreads to Red Sea and Caspian, Gulf quiet as US forgoes strikes

Escalation of Conflict and Regional Impacts

By Raphael Satter and Lefteris Papadimas

Overview of Recent Developments

WASHINGTON/ATHENS, July 26 (Reuters) - The Iran war broadened over the weekend despite a pause in U.S. strikes, as Yemen's Iran-aligned Houthis attacked Saudi oil installations along the Red Sea coast and Iran accused Ukraine of targeting one of its vessels in the Caspian Sea.

The U.S. military said on Saturday its naval blockade against Iran "remains in full effect" but did not explain why it halted a streak of 13 nights of escalating strikes.

There were also no weekend reports of attacks by Iran on neighbors, similar to its daily rejoinders to the U.S. attacks.

US Strategy and Diplomatic Stance

Asked about the pause, a senior official in President Donald Trump's administration said Trump "has always been clear that his preference is diplomacy, but he has shown Iran what will happen if they fail to come to the table in a serious way."

Trump has decided, for now, to back away from plans to ramp up attacks on Iran, the New York Times said on Saturday, citing two people briefed on the discussion.

The president and his advisers, the newspaper said, have concerns about expanding the conflict, depleting defense stockpiles, alienating Middle East Gulf allies and affecting energy supplies and the global economy.

Vice President JD Vance and Gen. Dan Caine, the chairman of the Joint Chiefs of Staff, both raised concerns about the U.S. munitions stockpile with Trump during a White House meeting on Friday, a U.S. official told CNN.

Operations are "on a hold," a Department of Defense source told the broadcaster on Saturday.

Red Sea and Caspian Sea Tensions

Despite the Gulf lull, Saturday's fighting between Iran's Houthi allies and Saudi Arabia showed that the war, which has already disrupted energy supplies through the Strait of Hormuz, could affect a second major shipping route and reignite Yemen's civil war.

Separately, Iran's Foreign Ministry accused Ukraine of attacking an Iranian commercial vessel in the ​Caspian Sea, saying one sailor was killed and another injured.

The ministry summoned ​Ukraine's chargé d'affaires in Tehran to protest over an attack it described as "hostile and criminal", state news agency IRNA said.

The Iranian denunciation coincided with comments ​by Ukrainian President Volodymyr Zelenskiy that Kyiv had noted Russia was passing ​on to Iran its satellite observations in the Middle East, to enable it to direct ‌strikes ⁠in the region.

Yemen Conflict Intensifies

Houthi Attacks on Saudi Oil Facilities

Red Sea Strikes and Oil Infrastructure

WAR THREATENS TO SPREAD TO YEMEN

Houthi military spokesperson Yahya Saree said the group struck sites belonging to Saudi state oil company Aramco in the cities of Jizan and Yanbu on Saturday.

A large column of smoke rose from the direction of the Aramco refinery in Jizan, near the Yemeni border, video on social media verified by Reuters showed. The refinery can process up to 400,000 barrels of crude oil daily.

Two Asia-based trading sources said they had been informed of potential damage to fuel and oil storage sites at Jizan. Aramco did not respond to requests for comment.

In Yanbu, two missiles aimed at oil installations were intercepted. Yanbu, Saudi Arabia's main Red Sea oil port, has become a key route for Saudi oil skirting the Strait of Hormuz, which Iran has blockaded.

Saudi-Led Coalition Response

Airstrikes and Military Mobilization

SAUDI-LED COALITION STRIKES HODEIDAH

In Yemen, officials said the air force of the Saudi-backed, internationally recognised government, which has opposed the Houthis for more than a decade, struck Houthi sites in the Marib and al-Jawf provinces.

The officials said both sides in Yemen's civil war were mobilising forces along the front.    

Saudi Arabia has led an Arab coalition battling the Houthis since the Iran-aligned fighters captured Yemen's capital, Sanaa.

Ceasefire Breakdown and Naval Blockade

The civil war, in which famine and fighting killed hundreds of thousands, has been paused by a ceasefire since 2022.

But that truce broke down this month, with the Houthis effectively joining the wider war their Iranian allies have waged since being attacked by the United States and Israel five months ago.

The Houthis have declared a naval blockade of Saudi Arabia over the past week, and Houthi leader Abdul Malik al-Houthi said all Saudi oil facilities could be targets.

(Reporting by Raphael Satter in Washington and Lefteris Papadimas in Athens; Writing by Raphael Satter and Kim Coghill; Editing by Rod Nickel, Matthew Lewis and Clarence Fernandez)

Key Takeaways

  • Houthis launched missile and drone attacks on Saudi oil installations at Jizan and Yanbu, with footage showing smoke over Jizan and Patriot systems intercepting missiles in Yanbu amid no U.S. strikes Saturday after 13 consecutive nights (au.investing.com).
  • Jizan hosts an Aramco refinery with up to 400,000 barrels‑per‑day capacity, while Yanbu is a strategic Red Sea oil export hub bypassing the Strait of Hormuz blocked by Iran (noticias.uol.com.br).
  • On July 25, Iran’s Foreign Ministry blasted a Ukrainian strike on an Iranian commercial vessel in the Caspian Sea, claiming one sailor was killed and another injured; Zelenskiy earlier said Ukraine hit vessels shipping Iran-linked military cargo (investing.com).

References

Frequently Asked Questions

How is the Iran war affecting oil supplies?
The Iran war has disrupted oil supplies by escalating attacks near the Red Sea and forcing alternative shipping routes, threatening global energy markets.
What recent attacks have occurred in the Red Sea region?
Yemen's Houthi forces, aligned with Iran, attacked Saudi oil installations in Jizan and Yanbu along the Red Sea, targeting key oil infrastructure.
Why did the US pause its strikes on Iran?
The US paused its strikes after 13 nights of escalation, with officials stating a preference for diplomacy but maintaining a naval blockade on Iran.
What happened in the Caspian Sea involving Iran?
Iran accused Ukraine of attacking a commercial vessel in the Caspian Sea, causing an explosion that killed one sailor and injured another.
How are energy markets reacting to the conflict?
The expanding conflict has raised concerns of supply disruptions through critical oil routes, which could increase volatility in global energy markets.

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