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Houthi embargo threat
Oil prices rose as Yemen’s Iran-backed Houthi militants declared a maritime embargo on Saudi Arabia, adding to supply disruption fears tied to the U.S.-Iran conflict.
“Houthi militants in Yemen declared a maritime embargo on Saudi Arabia”
CNBC reported Brent crude futures gained about 1.3% to close at $89.22 per barrel, while U.S. West Texas Intermediate crude futures advanced 0.9% to settle at $83.23 per barrel.
In the same reporting, President Donald Trump said Iran would pay for the deaths of three U.S. service members, and he wrote, "Every time Iran kills an American Soldier they will pay for that killing many times over!"
The CNBC account also linked the Yemen move to the Houthis’ repeated threats to close the Bab el-Mandeb Strait, which connects the Red Sea to global markets, and it said the Saudis have diverted millions of barrels of oil per day through a pipeline to an export terminal on the Red Sea.
Bab el-Mandeb and Hormuz
ING Think tied the Yemen-related risk to a wider Persian Gulf escalation, saying reports that Iran told the Houthis in Yemen to "essentially shut the Bab el-Mandeb Strait" if the U.S. attacks Iranian power infrastructure.
The ING account said the Bab el-Mandeb Strait is important for vessel movements through the Red Sea and that the Saudis have relied heavily on this route since the war began to bypass the Strait of Hormuz.
ING Think also described vessel flows as grinding to a halt, citing LSEG data that only two outbound visible oil tankers transited the Strait of Hormuz with no inbound traffic.
In parallel, NDTV Profit said Yemen’s Iran-backed Houthi militants threatened to block Saudi Arabia’s maritime traffic in the Red Sea, which could jeopardise an export route that allows the kingdom to ship millions of barrels of crude through a pipeline that bypasses the Strait of Hormuz.
Market stakes and shipping
As the Yemen-linked Red Sea risk fed into broader shipping concerns, ING Think warned that if escalation goes unchecked, "we could return to an environment of wide-scale attacks across the Persian Gulf".
“we could return to an environment of wide-scale attacks across the Persian Gulf”
ING Think said SPR releases set to cease around the end of this month would leave the market relatively more vulnerable, and it described speculators increasing their net long in ICE Brent by buying 114,752 lots over the last reporting week to leave a net long of 169,839 lots as of last Tuesday.
CNBC added that the U.S. has bombed Iran for nine consecutive nights in retaliation for repeated attacks on oil tankers transiting the Strait of Hormuz, and it said Tehran is trying to force ships to transit the strait through its territorial waters.
CNBC also reported that the Houthis’ embargo could exacerbate oil supply disruption triggered by Iran’s tanker attacks in Hormuz, while it noted an oil products tanker off Oman's coast was struck by a projectile over the weekend, causing a fire onboard that the crew safely abandoned.
