Saudi Arabia, which has been exporting oil through the Red Sea since the closure of the Strait of Hormuz, is on high alert. Saudi Arabia is clashing with Yemen's Houthi rebels in the Red Sea, disrupting even rerouted crude exports.
On the 9th, according to data from maritime intelligence firm Kpler cited by the New York Times (NYT), Saudi oil exports averaged 3.2 million barrels a day last month, the lowest in at least 13 years. Until the outbreak of the U.S.-Iran war, Saudi daily crude exports were about 7 million barrels.
As oil supplies from Saudi Arabia, the world's largest crude exporter, plunged, prices are soaring. With U.S.-Iran military exchanges around the Strait of Hormuz adding to the strain, international oil prices topped $100 a barrel that day. On London's ICE Futures Exchange, November Brent settled at $101.21 a barrel, up $3.29, or 3.36%, from the previous session, a record high in four months.
After the Iran war broke out, Saudi Arabia fully activated its East–West pipeline to move crude to Yanbu port on the Red Sea coast and continued exports. But as armed clashes erupted in the Bab al-Mandab Strait between the Iran-backed Houthi rebels and Saudi Arabia, exports via the Red Sea have also become difficult.
The NYT reported that the Houthis have made clear they would keep the Red Sea open to ships not linked to Saudi Arabia to avoid U.S. retaliation, but even those ships are using the Red Sea less. According to shipping data firm Leth Agencies, an average of 35 ships a day transited the Bab al-Mandab in August, the lowest since July last year.
Peter Sands of shipping analytics firm Xeneta said, "Even the slight sense of relief shipping companies felt using the Red Sea before the recent escalation has completely vanished."
Since the Houthis blockaded the Red Sea, Saudi Arabia has been pushing oil exports through another detour. According to the NYT, Saudi Arabia is sending ships north in the Red Sea to use an Egyptian pipeline near the Suez Canal. The problem is that using this route adds several weeks to deliveries to Asia, where Saudi crude's main customers are, and increases the expense.
Burcu Ozcelik, a senior Middle East fellow at the London-based defense think tank Royal United Services Institute (RUSI), said the recent escalation between Saudi Arabia and the Houthis is raising concerns for global trade, noting, "Even if the Bab al-Mandab Strait is not physically closed, it can have a lasting impact on the economy."
With armed clashes in Hormuz and the Red Sea intensifying, Saudi crude exports are unlikely to normalize for the time being. On the 8th, the day before, the Houthis attacked an air base in Khamis Mushait in southwestern Saudi Arabia and petroleum infrastructure in a nearby city with missiles and drones, injuring 73 people. Saudi Arabia then carried out concentrated airstrikes on Houthi positions in Yemen.
Some analysts say Iran's strategy lies behind the renewed escalation between Saudi Arabia and the Houthis after years of relative calm. They say the Houthis' attacks on Saudi Arabia align with Iran's broader strategy to pressure global supply chains. Fawaz Gerges, a professor at the London School of Economics and Political Science (LSE) and a Middle East expert, said, "Through the Houthis' actions, Iran is benefiting, directly or indirectly," adding, "If a full-scale war breaks out between Saudi Arabia and the Houthis, it could have a serious impact on global energy supplies."
The NYT said, "Saudi Arabia, as the world's largest oil exporter, has supplied massive amounts of crude quickly and cheaply," adding, "Now that oil supply capacity is being tested once again." The Financial Times (FT) said, "As Saudi Crown Prince Mohammed bin Salman pursues ambitious plans for national development, this latest escalation is posing considerable risks to Saudi Arabia."