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(Bloomberg) — Oil advanced as Iran-backed Houthi militants in Yemen entered the Middle East war and more US troops arrived in the region, raising fears the widening conflict will cause further chaos for energy markets.

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Brent — on track for a record monthly gain — surged more than 3% at the open to $116.43 a barrel after the Houthis fired missiles at Israel over the weekend, and said they would continue operations until attacks on Iran and its proxy militant groups cease. West Texas Intermediate jumped above $100.

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While the militant group didn’t say they would target vessels transiting through the southern Red Sea and the Bab El-Mandeb Strait, they have the capability to do so. The Saudi Arabian port of Yanbu, which the kingdom is using for some of its oil exports after the crucial Strait of Hormuz was effectively closed by the war, is also well within the range of Houthi missiles.

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Threats from the Houthis to “Saudi oil infrastructure and exports through the Red sea outlet is like denying bypass surgery that worked well to arrest the full heart attack” of the Strait of Hormuz closure, said Mukesh Sahdev, chief executive officer of XAnalysts Pty.

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Brent has surged more than 50% in March as the war between the US, Israel and Iran upended global markets and triggered concern about a simultaneous spike in inflation and slowdown in growth. The conflict has entered its fifth week and is showing no sign of abating despite a diplomatic push by Washington last week and separate peace talks over the weekend in Pakistan.

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Iran has choked off all but a fraction of the traffic passing through the Strait of Hormuz, the waterway that links the Persian Gulf to global markets. Tehran has moved to formalize its control of the artery, barring most vessels, while allowing a handful to pass, including from Pakistan, Thailand and Malaysia.

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The involvement of the Houthis presents a new risk for crude markets. The group effectively shut the Red Sea to most Western shippers after the war in Gaza began in 2023, forcing vessels to reroute. Any threats to cargoes loaded via Saudi Arabia’s Yanbu would further constrain supplies. Riyadh has been ramping up exports through Red Sea, cushioning the supply shock.

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The move by the Houthis adds “upside risk mainly via shipping and Red Sea routing,” said Haris Khurshid, chief investment officer at Karobaar Capital LP in Chicago, “But unless it spills into broader Gulf infrastructure or Hormuz flows, it’s more volatility than a true supply shock,” he added.

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Banks have been scrambling to calculate how the war — and prices — may evolve. Macquarie Group Ltd. said last week futures may hit $200 a barrel if the conflict drags on till June and Hormuz stays shut in a scenario with 40% odds.

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Brent’s prompt spread points to acute concern about near-term supply in a backwardated, bullish pattern, with the front-month contract trading at a huge premium to the next. The gap was more than $7 a barrel on Monday, compared with little difference the week before the war broke out.

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The US has ordered thousands of troops to the region, fanning fears of a risky ground invasion. The Washington Post reported the Pentagon is preparing for weeks of ground operations in Iran, citing US officials, but senior administration staff, including Secretary of State Marco Rubio, have downplayed such a move.

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The conflict has hit other industries. Over the weekend, Emirates Global Aluminium sustained “significant damage” during an Iranian missile and drone strike on Saturday. In addition, an Aluminium Bahrain facility was hit.

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—With assistance from Rong Wei Neo and Rob Verdonck.

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