Houthi Blockade Threatens Saudi Oil Lifeline – Experts

Yemen’s Houthi militia has threatened to choke off Saudi Arabia’s access to the Red Sea, opening a dangerous new front in the Middle East conflict and placing millions of barrels of daily oil exports at risk. The group declared a maritime blockade against the kingdom and warned international shipping companies against loading or unloading cargo at Saudi ports, raising fears that the world’s most important oil exporter could lose a critical escape route around the Strait of Hormuz.

The Houthi warning took effect Monday and applies to vessels doing business with Saudi ports, according to an email distributed to shipping companies by the group’s Humanitarian Operations Coordination Center. The militia threatened sanctions and possible attacks against ships that ignore the order. Saudi Arabia rejected the declaration as illegal maritime piracy and said it had begun taking measures to protect commercial traffic. No new vessel strike had been independently confirmed by Tuesday, but at least two Saudi oil tankers altered their routes after the warning.

Houthi blockade threatens Saudi oil exports

“This Houthi threat is a serious escalation,” energy expert Ben Cahill told America Report. “Already, tanker owners and crews seem more reluctant to transit Bab el-Mandeb.”

The Bab el-Mandeb Strait, located between Yemen and the Horn of Africa, connects the Red Sea with the Gulf of Aden and the Indian Ocean. It is the southern gateway for ships traveling toward the Suez Canal. Saudi Arabia has become increasingly dependent on the route after diverting crude away from the Strait of Hormuz, where the war with Iran has already sharply disrupted normal shipping.

The Houthis’ threat alone could be enough to deter crews, increase insurance premiums and force ships to take the much longer route around Africa. War-risk insurance costs for Red Sea voyages were already rising after the blockade announcement, according to shipping industry sources.

“It’s another reminder that cheap, easy-to-manufacture drones can target all kinds of energy infrastructure and harm oil and gas production and transit,” Cahill said. “Just look at the damage Ukraine has inflicted on Russia’s refining industry, from hundreds of miles away.”

The Houthis have prepared missiles and drones near the Bab el-Mandeb and along Yemen’s Red Sea coast, Reuters previously reported, citing a source close to the group. The weapons could threaten tankers, export terminals, pipelines and Saudi infrastructure around the major Red Sea port of Yanbu.

Millions of barrels placed at risk

Oil analyst Andrew Lipow said about 20 million barrels per day moved through the Strait of Hormuz before the conflict. Roughly 14 million barrels consisted of crude oil, while another six million barrels were refined petroleum products and petrochemicals.

Of those 14 million barrels of crude, around 5.75 million barrels per day could be diverted through pipelines, Lipow said. That included 4.5 million barrels through Saudi Arabia’s East-West Pipeline to Yanbu, one million barrels through the United Arab Emirates’ pipeline to Fujairah and approximately 250,000 barrels through the Iraq-Turkey pipeline.

Saudi Arabia’s East-West Pipeline now carries nearly seven million barrels per day, close to its restored full capacity. Before the conflict, it transported roughly 2.4 million barrels daily to supply refineries at Yanbu and support exports through the Red Sea, the Suez Canal and Egypt’s SUMED pipeline. Saudi authorities announced in April that the pipeline had returned to its full capacity of approximately seven million barrels per day following earlier attacks.

The pipeline crosses Saudi Arabia from oil-producing areas in the east to Yanbu in the west, allowing the kingdom to bypass Hormuz. But that solution transfers the risk to the Red Sea. Some crude shipped from Yanbu heads north toward the Suez Canal, while tankers bound for Asian markets must travel south through the Bab el-Mandeb.

“If the south exit through the Bab el-Mandeb Strait is blockaded, about 2.5 million barrels per day of crude oil exports are impacted,” Lipow told America Report.

“If the Houthis damage or blockade Yanbu, the impact is at least 4.5 million barrels per day — and probably over five million if exports previously headed to the Suez Canal are included,” he said. “I would expect that if the Houthis were to blockade this route, oil prices would rise $10 per barrel.”

Oil market braces for prolonged war

The Houthi declaration comes as the global oil market is already struggling with disruptions in the Persian Gulf. A full blockade of the Bab el-Mandeb could further reduce available global supplies, force costly rerouting and undermine Saudi Arabia’s main alternative to Hormuz. The strait also carries a significant share of international container traffic between Asia and Europe.

“The market now seems to expect an on-again, off-again war in the Gulf that will drag on for some time,” Cahill said. “I doubt this can continue without a sharp oil price impact.”

Brent crude climbed above $90 per barrel Tuesday as traders reacted to the expanding regional conflict and the growing threat to both Hormuz and Red Sea shipping.

“Already, Brent crude for prompt delivery is above $90 per barrel,” Cahill said.

The danger is no longer confined to a single maritime choke point. Iran can pressure shipping in the Strait of Hormuz, while its Houthi allies can threaten Saudi ports and the Bab el-Mandeb hundreds of miles to the west. Together, the two fronts could squeeze oil traffic at both ends of the Arabian Peninsula and leave global energy markets vulnerable to the next missile, drone or blockade order.