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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

5 min read

· Last updated: July 25, 2026

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

Escalation and Regional Impact of the Iran Conflict

By Raphael Satter and Lefteris Papadimas

WASHINGTON/ATHENS, July 26 (Reuters) - Signs of the Iran war's spread emerged this 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 an Iranian vessel in the Caspian Sea.

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

There were also no reports on Saturday of attacks from Iran on neighboring countries, like those that have been taking place daily in response to the U.S. attacks.

Trump has decided, for now, to back away from earlier plans to ramp up attacks on Iran, the New York Times reported on Saturday night, citing two people briefed on the discussion. The president and his advisers, according to the Times, have concerns about expanding the conflict, depleting defense stockpiles, alienating Persian Gulf allies and affecting energy supplies and the global economy.

Despite the lull in the Gulf, fighting between Iran's Houthi allies and Saudi Arabia on Saturday indicated 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 it resulted in an explosion that killed ‌a sailor and injured another.

Earlier on Saturday, Ukrainian President Volodymyr Zelenskiy in a social media post praised the results of "long‑range strikes" in the Caspian Sea, alluding to vessels shipping military cargo, but did not identify the nationality of the targets.

Red Sea Tensions and Houthi Attacks

War Threatens to Spread to Yemen

Houthi military spokesperson Yahya Saree said the group struck sites belonging to Saudi state oil company Aramco in Jizan and Yanbu. Video shared on social media and verified by Reuters showed a large column of smoke rising from the direction of the Aramco refinery in Jizan.

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 ballistic missiles aimed at oil installations were intercepted by a U.S.-made Patriot battery operated in Saudi Arabia by the Greek military under an agreement with Riyadh, Greek security sources said.

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. Up to 400,000 barrels can be processed daily at the oil refinery in Jizan, a city on the Red Sea close to the Yemeni border.

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

Earlier, the Saudi-led military alliance said it bombed Houthi military positions on Friday in the Red Sea port of Hodeidah.

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

Saudi-led Coalition Strikes Hodeidah

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

The Yemeni civil war, during which hundreds of thousands of people died from fighting and famine, has been paused under 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 U.S. and Israel.

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. On Thursday, the Houthis struck two Saudi tankers in the Red Sea.

US and Iran Naval Maneuvers

American forces recently resumed their own blockade on Iranian ports. U.S. Central Command, whose coverage area includes the Middle East, said it disabled a ship whose crew attempted to run the blockade despite "repeated warnings" on Friday in the Gulf of Oman.

An interim truce effectively collapsed two weeks ago, with U.S. forces striking targets in southern Iran in response to Iranian disruption of shipping in the Strait of Hormuz. 

On Friday, Trump said the ‌U.S. and Iran were in talks to ​negotiate an end ​to their conflict, but ⁠repeated that Tehran ​was not yet ready ​for a deal.

Reporting Credits

(Reporting by Raphael Satter in Washington and Lefteris Papadimas in Athens; Writing by Raphael Satter; Editing by Sergio Non, Rod Nickel and Matthew Lewis)

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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