As Houthis declare Red Sea blockade on Saudi Arabia, oil markets brace for impact
The Iran-backed group said the maritime embargo on the Gulf's biggest crude exporter would be effective immediately.
Yemen’s Iran-backed Houthi rebel group said on Monday that it was imposing a naval blockade on Saudi Arabia, as the regional war widens to threaten another key route for global oil supplies after months of disruption in the Strait of Hormuz.
What happened: In a statement on Monday, the Houthis' armed forces said they were declaring "a maritime embargo against the criminal Saudi enemy, based on the equation of 'an eye for an eye,' effective immediately."
The Houthis said that the decision was a response to Saudi Arabia's “unjust and oppressive siege” on Yemen.
A Saudi-led coalition has backed Yemen's internationally recognized government since 2015 and Saudi forces struck Sanaa International Airport last week, marking a new phase in the conflict.
Saudi Arabia has yet to respond publicly to the blockade statement.
Why it matters: The Houthi threat targets the Bab el-Mandeb Strait, the narrow waterway linking the Red Sea to the Gulf of Aden and the Arabian Sea. The route is a vital artery for global energy trade, carrying Saudi crude exports from the Red Sea to Europe and Asia.
Total petroleum volumes of 7.4 million barrels per day transited Bab el-Mandeb in June, per data from shipping analytics firm Kpler, up from 4.2 million bpd last year.
The strait's closure would mean most of Saudi Arabia’s oil exports are unable to leave the region and cause global supplies to fall by 7%, according to Kpler data.
The latest threat comes as Gulf producers are already struggling with the near-total closure of the Strait of Hormuz — which runs between Iran, Oman and the United Arab Emirates — since March as a result of the US-Israel-Iran war. In peacetime, around a fifth of the world’s oil and liquefied natural gas shipments flowed through the waterway.
Saudi Arabia has redirected much of its crude exports through its Red Sea terminal at Yanbu. Speaking to Al-Monitor, UBS commodities analyst Giovanni Staunovo said the kingdom has increased exports from Yanbu to around 4.5 million bpd, more than 70% of Saudi Arabia's crude shipments.
Ships leaving Yanbu for Europe sail north through the Suez Canal, while those headed for Asia travel south through Bab el-Mandeb.
“The Houthi blockade could put at risk large parts of the Saudi exports relying on the Bab el Mandeb Strait,” Staunovo said.
In a statement shared with journalists, Jorge Leon, senior vice president and head of geopolitical analysis at consultancy firm Rystad Energy, said the Houthis had yet to explain how they intended to enforce the blockade, but their previous attacks on commercial vessels showed they possessed both the capability and willingness to disrupt Red Sea shipping.
According to Rystad vessel-tracking data, around 2.5 million bpd of crude leaving Yanbu currently passes south through Bab el-Mandeb.
"If a ceasefire does not materialize and Hormuz remains largely closed while the Houthi threat to Red Sea shipping intensifies, the risk of a significant rebound in oil prices would be substantial," Leon said.
Know more: Reuters reported on July 16 that Iran has been urging the Houthis to close Bab el-Mandeb if the United States continues attacking Iranian power infrastructure, citing three sources familiar with the discussions.
