Oil prices surged by more than 1.5% in Asian trading on Thursday, reaching a six-week high after Houthi rebels in Yemen claimed to have struck two Saudi oil tankers in the Red Sea. Brent crude futures rose by $2.20, or 2.3%, to $96.27 by 03:27 GMT, marking their highest level since June 8. US West Texas Intermediate crude increased by $1.65, or 1.9%, to $88.48. The attack has created concerns about a potential naval blockade on Saudi Arabia, introducing a new choke point for global oil supplies alongside the near-closure of the Strait of Hormuz by Iran.
The Houthis stated they carried out missile and drone strikes on two Saudi oil tankers, identified as the Encelia and the Layla. Saudi state news agency SPA confirmed that the Encelia was hit, causing a fire at its bow, but the attack on the Layla remains unconfirmed. A maritime security source reported that the Encelia transmitted a distress call after being struck by a missile near the Saudi port of Jizan. The Houthis also claimed to have forced approximately ten ships to abandon their routes and turn back.
This incident comes as the Strait of Hormuz has been effectively closed since late February, following the Israel-US war on Iran. If both the Strait of Hormuz and the Bab el-Mandeb Strait were closed, it could block 25% of the world's oil and gas supply. Saudi Arabia has been diverting millions of barrels per day of oil through its Red Sea port of Yanbu to avoid the Strait of Hormuz, with about four million barrels per day shipped from Yanbu recently, a significant increase from 973,000 barrels a year earlier. The EU's naval force Aspides has recommended that merchant vessels linked to Israeli, US, or Saudi interests avoid transiting the Red Sea and Gulf of Aden.
The Houthis sent an email to shipowners stating that vessels are banned from loading or discharging cargo at any Saudi ports and may be targeted. Analysts, such as Saul Kavonic from MST Marquee, estimate that the new Red Sea threat could interrupt up to 5 million barrels per day of oil supply. Priyanka Sachdeva, a senior market analyst at Phillip Nova, highlighted the rare risk posed by simultaneous disruptions at both the Bab el-Mandeb and the Strait of Hormuz, noting that geopolitical premiums have returned, but a sustained price rally would require prolonged shipping disruptions or significant supply outages.
If the Bab el-Mandeb Strait is effectively closed, Saudi oil exports might have to reroute through the Mediterranean and around the southern tip of Africa to reach Asia, adding weeks and costs to journeys. Financial analysts from Gelber & Associates noted mounting supply disruption fears as intensified conflict forces commercial vessels to alter trade routes. The Brent crude three-month timespread also expanded to $9.26 a barrel, its widest since May, indicating tighter near-term supply, and further pushing prices to the upside.
