Saudi Oil Route Threatened by Blockade
The Iran-backed Houthi group in Yemen has declared a maritime blockade against Saudi Arabia. This move could potentially disrupt the flow of millions of barrels of oil, which Saudi Arabia says it will supply to be exported through the Red Sea.
This threat adds new risks to Middle Eastern oil supplies. Shipping traffic through the Strait of Hormuz was already virtually halted due to the escalating tensions between the United States and Iran.
The Red Sea has now become a vital route for Saudi Arabian oil exports after the kingdom diverted supplies to the Port of Yanbu. This diversion came after the US-Iran war further restricted access through Hormuz.
Saudi oil exports through the route rose to a record 4.19 million barrels per day last month. However, the route remains fragile because tankers must pass through areas previously targeted by Houthi attacks.
The Houthis say the blockade is a response to what they claim is a Saudi siege of Sana'a, the Yemeni capital. Tensions between Riyadh and the Houthis have also escalated following attacks on Sana'a airport and Houthi retaliation against airports in southern Saudi Arabia. As a result, oil prices have the potential to remain sensitive to market impacts, as two crucial waterways, the Strait of Hormuz and the Red Sea, are both under pressure. If the Houthi blockade seriously disrupts Saudi exports, Brent could rebound, while the risk of global inflation and pressure on the stock market could also increase. (arl)
Source: Newsmaker.id
