Oil prices have surged by more than $20 a barrel this month, partly due to renewed hostilities in the Middle East, with Brent crude briefly exceeding $95. This increase is exacerbated by a "two chokepoint problem" for oil markets, as threats from Iran-aligned Houthis in Yemen impact Red Sea shipping, following earlier disruptions at the Strait of Hormuz.
The Houthis, who control coastal areas of Yemen, announced a naval blockade on Saudi Arabia on Monday, threatening to attack any vessels loading or discharging Saudi oil. This has already caused two tankers carrying Saudi crude for China and India from Yanbu, Saudi Arabia's Red Sea port, to make U-turns, heading toward the Suez Canal instead of the Bab el-Mandeb strait. This route redirection highlights the immediate impact on Saudi oil exports, which had relied on the Red Sea via the East-West pipeline to bypass disruptions at the Strait of Hormuz.
Saudi Arabia diverts approximately 4 million to 5 million barrels of oil per day through its East-West pipeline to its Red Sea port of Yanbu. A full blockade of the Bab el-Mandeb could raise oil prices by an additional $5 to $10 a barrel, potentially pushing them above $100. If this alternative Red Sea route becomes inoperable, it would lead to a more serious oil supply disruption, trapping a significant portion of Saudi oil exports.
US President Donald Trump stated that the Bab el-Mandeb had not yet been shut but threatened action if it were. The British maritime security company Ambrey has advised vessels calling at Saudi Arabian ports to reconsider transiting the Red Sea, assessing them to be at high risk. Despite these threats, Yanbu continues to load crude onto tankers already in the Red Sea or those that entered via the Suez Canal.
