Saudi Arabia takes center stage as oil hits $100 and the Iran war escalates amid Houthi attacks and nuclear expansion

The war in Iran has officially expanded into Saudi Arabia and the Red Sea as Yemeni Houthis attacked Saudi tankers avoiding the dangerous Strait of Hormuz and oil prices rose above $100 per barrel Thursday for the first time since early June.

The Iran-allied Houthi attacks followed the U.S. signing a nuclear power agreement with the Saudis on Wednesday to develop a civilian nuclear program in the kingdom—just as the U.S. aims to prevent the Saudis’ Iranian rivals from expanding their nuclear ambitions.

“The net effect of this nuclear deal is escalatory,” said Jennifer Li, senior geopolitical analyst for the Rystad Energy research firm. “There isn’t really a scenario in which the Iranians will view this favorably. The Iranians have positioned the Houthis, in theory, to go out and target this embargo specifically of Saudi vessels.

“From the perspective of Tehran, there’s more willingness to escalate in terms of this whole ‘Who blinks first?’ dilemma,” Li told Fortune. “I think it forces both sides to become more maximalist.”

The new Houthi attacks in the Red Sea’s Bab el-Mandeb Str...