Oil prices, specifically Brent crude, climbed significantly to over $91 a barrel, and U.S. gasoline prices surpassed $4 a gallon, in response to Houthi attacks on Saudi oil tankers. This incident sparked fears of disruptions to crucial shipping lanes, particularly the Bab el-Mandeb Strait, which is vital for global oil transit. Analysts noted that the attacks on the tankers, identified as the Encelia and the Layla, could drive up freight rates and consumer energy costs.
The Houthi movement announced a naval blockade on Saudi Arabia, threatening to target vessels loading or discharging Saudi oil. This threat has already led to several tankers reversing course in the Red Sea, opting for longer routes via the Suez Canal and around Africa to avoid the danger zone. Such diversions add weeks and substantial costs to journeys, further stressing the global energy market.
Since the closure of the Strait of Hormuz, Saudi Arabia has rerouted over 70% of its crude exports through an east-west pipeline to the Red Sea port of Yanbu. This alternative route, which has seen shipments of approximately 4 million barrels per day recently, is now also under threat. The escalation in the Red Sea, alongside ongoing tensions in the Strait of Hormuz, presents a "dual-strait worry" for the energy market, making the global energy system more vulnerable to shocks, as noted by analysts like Naveen Das from Kpler and Rosemary Kelanic from the US-based Priorities think tank.
