Iran-backed Houthi rebels have announced a naval blockade targeting Saudi Arabia, raising fears of renewed disruptions to global oil supplies and adding fresh geopolitical risk to energy markets.
Houthi naval blockade raises concerns over global energy security
The Houthi naval blockade targeting Saudi Arabia could trigger another surge in crude oil prices. If the Iran-backed Houthi movement in Yemen succeeds in effectively disrupting shipping through the Bab el-Mandeb Strait, global supplies of crude oil and refined fuels could face renewed interruptions, amplifying the impact of the ongoing energy crisis on the world economy.
The continuing exchange of military strikes across the region is intensifying concerns over further disruptions to global energy supplies. Yemen’s Iran-backed Houthis have opened a new front by announcing a naval blockade against Saudi Arabia and threatening to target vessels transporting Saudi crude through the Bab el-Mandeb Strait.
On 22 July, Brent crude futures climbed 2.0%, reaching their highest level since 11 June. West Texas Intermediate (WTI) also gained 2.0%, marking its highest level since 12 June. The previous day, oil prices had already reached a five-week high following US strikes against Iranian targets and Iranian attacks on US facilities in Bahrain, Kuwait and Jordan.
Diplomatic uncertainty continues to shape oil prices
Earlier, the prospect of renewed peace talks between Iran and the United States had placed downward pressure on oil prices. This year, crude futures have traded as high as $126 per barrel, supported in part by weaker Chinese demand, although they remain below the all-time record of $147 per barrel reached in 2008. Iran has a clear incentive to leverage higher oil prices in order to strengthen its negotiating position, using the Houthi threat as additional pressure during diplomatic talks.
Bab el-Mandeb remains a strategic alternative to Hormuz
The Bab el-Mandeb Strait, the southern gateway to the Red Sea, represents Saudi Arabia’s most important alternative export route to the Strait of Hormuz. It remains unclear how the Houthis intend to enforce the naval blockade or whether the announcement signals a return to attacks on international shipping off Yemen’s coastline.
The Houthis previously disrupted global trade by attacking commercial vessels near Bab el-Mandeb in 2023 following the outbreak of the Gaza conflict. Those attacks eventually subsided after the ceasefire agreement in Gaza.
Bab el-Mandeb connects the Red Sea with the Gulf of Aden and serves as one of the world’s most important maritime corridors for crude oil and refined fuel shipments between the Middle East, Europe and Asia. Following the Houthi attacks in 2023, many shipping companies were forced to reroute vessels around the Cape of Good Hope, increasing transportation costs and extending delivery times for global trade.
Risks are increasing across both regional chokepoints
According to shipping intelligence firm Kpler, maritime traffic continues to flow through both the Strait of Hormuz and Bab el-Mandeb, although operational confidence remains under significant pressure.
Traffic dropped sharply across both waterways on 21 July. Daily vessel transits through the Strait of Hormuz declined by 31%, with only nine vessels passing through, while traffic through Bab el-Mandeb fell 34%, with 29 ships recorded. Kpler also confirmed four U-turns near the Gulf of Aden, suggesting that ship operators are becoming increasingly cautious following the latest Houthi threats.
Kpler also reported continuing confirmed maritime attacks around the Strait of Hormuz, reinforcing concerns that growing uncertainty across both strategic chokepoints may influence shipping decisions, increase freight costs and sustain higher geopolitical risk premiums across global energy markets.
According to Reuters, three tankers carrying Saudi crude destined for China and India reversed course in the Red Sea on 21 July, heading towards the Suez Canal instead of continuing towards the Yemeni coast after the Houthi threats.
A Chinese vehicle carrier operated by COSCO Shipping was reportedly the first tracked vessel to perform a U-turn following the announcement of the Houthi naval blockade against Saudi Arabia. The development suggests that even Chinese vessels may not be exempt from the new embargo. The vessel Liu Jiang Kou was sailing through the Gulf of Aden towards the Red Sea before reversing course near Djibouti, according to tracking data from Lloyd’s List Intelligence.
Saudi crude exports from Yanbu face the greatest risk
The most immediate impact of any complete closure of the waterway would fall on Saudi crude exports departing from the port of Yanbu.
Saudi Arabia’s main strategy to reduce its dependence on the Strait of Hormuz has been the expansion of the East-West Pipeline, also known as Petroline. Built during the 1980s, the 1,201-kilometre pipeline transports crude from the eastern oil hub of Abqaiq across the Kingdom to Yanbu on the Red Sea coast. The infrastructure currently has the capacity to move nearly 7 million barrels of oil per day. From Yanbu, tankers normally transit through Bab el-Mandeb before reaching international markets.
According to Kpler, total oil flows through Bab el-Mandeb reached 7.4 million barrels per day in June, representing nearly 7% of global oil production. This marks a significant increase compared with 4.2 million barrels per day recorded a year earlier.
Matt Smith, Head of Commodities Research at Kpler, told Reuters that Asian refineries receiving these cargoes could experience shipping delays of around one month, as tankers would be forced to sail around the Cape of Good Hope.
Consultancy Bronze estimates that more than 3 million barrels per day of Saudi crude currently shipped to Asia through the Red Sea could be diverted onto substantially longer routes. Such disruption would create significant logistical bottlenecks because fully loaded Very Large Crude Carriers (VLCCs) cannot transit the Suez Canal, while the capacity of Egypt’s SUMED pipeline, which links the Red Sea to the Mediterranean, remains fixed.
