Why the Houthis’ Saudi blockade could shake oil markets | Bab el-Mandeb | US-Iran war | Crude oil

[00:00:00]A new flash point has emerged in West Asia. Yemen's Houthi rebels have announced a naval blockade on Saudi Arabia, raising fears of another disruption to global oil supplies and shipping. If enforced, it could threaten one of the world's busiest maritime trade routes and add fresh pressure to energy markets already strained by the Iran-US-Israel conflict. So, what have the Houthis announced and why does it matter? The Houthis, also known as Ansar Allah, have declared an immediate maritime embargo on Saudi Arabia. They described it as an eye for an eye response, accusing Arabia of imposing an economic blockade on Yemen for nearly 12 years by restricting its ports and airports. The group warned that any further Saudi escalation would be met with what it called a comprehensive and decisive response. The announcement came just days after an attack on Sana'a International Airport, which the Houthis blamed on Saudi Arabia. Yemen's internationally recognized government, however, claimed responsibility, saying it was trying to stop an Iranian aircraft from landing. In retaliation, the Houthis fired ballistic missiles towards Saudi Arabia's Abha International Airport, which the Saudi-led coalition said it intercepted.

[00:01:05]At the center of this dispute is the Bab el-Mandeb Strait. This narrow waterway connects the Red Sea with the Gulf of Aden, making it a crucial link between Asia and Europe through the Suez Canal.

[00:01:15]Around 10 to 12% of global trade and nearly 30% of the world's container traffic pass through this route. It is also one of the world's most important corridor for transporting crude oil, petroleum products, and liquefied natural gas. According to Kepler, about 7.4 million barrels of petroleum moved through the strait every day in June, equivalent to nearly 7% of global oil production. The strait has become even more important because Saudi Arabia has increasingly shifted its oil exports to its Yanbu terminal on the Red Sea after disruptions in the Strait of Hormuz.

[00:01:48]Crude reaches Yanbu through the kingdom's 1,201 km east-west pipeline, also known as Petroline, before being shipped through the Bab el-Mandeb Strait to Asian and other international markets.

[00:01:59]If the route is disrupted, Saudi oil exports could be affected, tightening global supplies, and pushing up energy prices. And if both the Strait of Hormuz and the Bab-el-Mandeb Strait becomes inaccessible, nearly 1/4 of the world's oil and gas supplies could be disrupted.

[00:02:14]Ships traveling between Asia and Europe would also have to bypass the Suez Canal and sail around the Cape of Good Hope in Southern Africa, adding 10 to 14 days to voyages and increasing freight, fuel, and insurance costs.

[00:02:26]The Houthis emerged in northern Yemen in the late 1990s as a movement representing followers of the Zaidi branch of Shiite Islam.

[00:02:34]They seized Yemen's capital, Sanaa, in 2014, triggering a civil war. Today, they control much of northern Yemen and have evolved into a heavily armed force equipped with drones and ballistic missiles. Saudi Arabia and several Western countries say Iran supplies these weapons, an allegation Tehran denies. For now, the Houthis' blockade announcement marks another escalation in an already volatile region.

[00:02:56]Whether it develops into a sustained disruption will depend on how Saudi Arabia and its allies respond, but one thing is clear, any threat to the Bab-el-Mandeb Strait is no longer just a regional security issue. It has the potential to affect global trade, oil prices, and inflation around the world.

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