With Hormuz Blocked By The US-Iran War And Bab Al-Mandeb Now Under Houthi Threat, Saudi Arabia’s $187 Billion In Annual Crude Exports Face The Worst Shipping Crisis In Modern History
According to Al Jazeera, Saudi Arabia on Monday condemned the Houthis’ declaration of a naval blockade, warning it would take “all necessary measures” to protect its ships after Yemen’s Iran-aligned group said it would impose a maritime siege on the Kingdom in retaliation for what it described as 12 years of Saudi aggression against the Yemeni people.
The announcement dramatically raises the global energy stakes. Since the US-Israel war on Iran closed the Strait of Hormuz in late February, Saudi Arabia had been rerouting oil through its East-West Petroline to the Red Sea port of Yanbu, where shipments reached 4 million barrels per day in recent weeks; four times the level a year earlier. The Houthis’ blockade would now threaten that alternative route via Bab al-Mandeb.
Total petroleum volumes transiting Bab al-Mandeb already reached 7.4 million barrels per day in June; about 7 per cent of global oil output. With Hormuz and Bab al-Mandeb simultaneously closed or threatened, analysts warn that up to 25 per cent of the world’s oil and gas supply could be at risk, affecting major importers including China (25.6% of Saudi crude), South Korea (15.8%), Japan (15.4%) and India (10.5%).
Brent crude climbed to $89.70 per barrel on Tuesday; up from an average of $70 before the war, and far below the $126 peak but continuing to rise.
“Essentially, what you’re doing is you’re shutting off the vast majority of oil supply from one of the world’s largest suppliers of crude,” said Michael Stephens of the Royal United Services Institute. “If you’re Donald Trump and you want to see oil down at $70 a barrel, that is not going to happen.”
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