Escalating Houthi warnings to ships carrying Saudi crude through the Bab al-Mandab strait have pushed oil prices back above $100 a barrel, opening a fresh front in the Middle East crisis and stoking fears of a further surge to $120 per barrel.
What happened?
On Monday, the Houthi militias sent an email to shipping companies warning them not to load or unload at Saudi ports or face being targeted “in any location” within their reach. The Tehran-allied group, which controls Yemen’s capital and its north-western territory along the Bab al-Mandab, reiterated the threat the following day, claiming that at least six ships had changed course as a result.
The trade route through the southern entrance to the Red Sea carried about 4.1m barrels of crude oil and refined petroleum products each day last year, roughly 5% of the global total. In contrast, the Strait of Hormuz once transited 20% of global oil supplies. Since the US-Israeli surprise strikes on Iran at the end of February, volumes through Bab al-Mandab have surged as it became a vital alternative export route for Saudi Arabia.
Impact on oil prices
Brent crude jumped by more than 13% in a matter of days, breaching $100 a barrel on Thursday. Since peace talks between the US and Iran broke down and President Trump declared the ceasefire “over,” the benchmark has climbed by more than a quarter, putting the market on track for its largest monthly gain since March, when the Hormuz blockade began.
Jorge León, head of geopolitical analysis at Rystad Energy, said: “If a ceasefire does not materialise 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.”
Houthi threats and Saudi response
A senior Houthi official said this week that policing Saudi crude exports via Bab al-Mandab would cause oil prices to “skyrocket to $200 a barrel in a dreadful shock” for the market. In a video statement, a Houthi military spokesperson described it as an “equation of ‘an eye for an eye’” after accusing Riyadh of breaching a four-year ceasefire earlier this month.
Saudi Arabia’s military warned that all Houthi threats against transiting vessels would “be dealt with swiftly and firmly, as such threats are a blatant violation of international law and fall under acts of maritime piracy.”
Shipping disruptions and costs
At least five Saudi-linked oil tankers bound for Bab al-Mandab turned back as Houthi blockade threats escalated, according to maritime intelligence data from Windward. Four of these were carrying Saudi-origin cargo. Additionally, an oil tanker destined for China reversed course after leaving the Red Sea port of Yanbu.
On Thursday, the Houthis claimed to have hit two Saudi tankers, with a Riyadh news agency later confirming that one was ablaze. Avoiding the strait entirely requires rerouting around Africa via the Cape of Good Hope, roughly doubling the voyage length and adding an estimated $2m-$2.5m in cost per transit.
Impact on road fuels and gas
Fatih Birol, head of the International Energy Agency, warned that many refineries have reduced production of fuel products, including diesel, to avoid the surging cost of crude. This has created greater stress on global fuel supplies. Goldman Sachs noted that global diesel supplies have been under pressure due to refinery outages in the Middle East and Russia, where Ukrainian drone attacks have reduced refining capacity by 80%.
Simon Williams, head of policy at the UK motoring group RAC, said: “Just three weeks ago we were celebrating the biggest ever monthly drop in the price of diesel. Now fuel prices are shooting up like a rocket.” The average price of diesel on British forecourts has climbed by almost 8p (5%) to 172.14p a litre in the past fortnight, while petrol rose by 5p (3%) to 155.57p.
For gas supplies, Birol said that while increased exports from the US and Canada offset about 70% of lost Gulf supply via Hormuz, availability is expected to remain tight as European buyers attempt to refill depleted storage facilities before winter.
Clémence Dubois, head of global campaigns at 350.org, said: “One of the world’s critical choke points remains closed as attempts to reopen it have failed. Now, we see a second critical choke point on the knife’s edge. That should terrify anyone who still thinks fossil fuel dependence is a safe bet. Those shocks travel straight into food, fuel and transport costs, hitting hardest in countries with the least fiscal room to absorb them, while fossil fuel companies reap insane profits.”
