The Houthis, a Yemeni armed group supported by Iran, announced yesterday a maritime embargo on Saudi Arabia, the world’s largest crude oil exporting country.
WHO ARE THE HOUTHI AND WHY ARE THEY HOSTILE TO SAUDI ARABIA
The Houthis, beyond their Shia ideology and hostility towards Israel, also share with Iran a rivalry against Saudi Arabia, a Sunni-oriented monarchy and supporter of the Yemeni government.
The group stated that the maritime embargo on Riyadh takes immediate effect and represents a response to the alleged Saudi siege of Sana’a, the official capital of Yemen under Houthi control since 2014: the true administrative center – where the recognized government is located, opposed by the rebels – is however Aden, in the south of the country.
Last week Riyadh attacked Sana’a airport; afterwards, the Houthis struck Abha airport, in southern Saudi Arabia.
THE CONSEQUENCES OF THE EMBARGO ON SAUDI ARABIA
The Houthi embargo risks worsening the international energy crisis caused by the Gulf war and the blockade of the Strait of Hormuz, the world’s most important waterway for fossil fuel trade: the United States and Iran have resumed attacks on each other and the free passage of ships in this stretch of sea has been blocked again.
Saudi Arabia can do without – at least partially – the Strait of Hormuz for its oil exports thanks to the East-West pipeline that connects the city of Jubail, on the Persian Gulf, to Yanbu, on the Red Sea. From Yanbu, crude shipments can then reach the Mediterranean Sea through the Suez Canal, or the Arabian Sea – and thus the Indian Ocean – passing through the Bab el-Mandeb Strait, between Yemen and the Horn of Africa.
However, the Houthi embargo directly threatens these flows. In June, moreover, Saudi Arabia’s oil exports from Yanbu reached a record level of 4.1 million barrels per day, more than half of the total in the pre-war period.
HOW OIL PRICES HAVE REACTED
The resumption of hostilities between the United States and Iran, combined with the embargo on Saudi Arabia, has pushed crude prices up by about 1 percent. Brent, the main international contract, gained 1.3 percent, to $89.2 per barrel; West Texas Intermediate, the American benchmark, rose 0.9 percent to $83.2.
There has been a price increase, then, but overall moderate: markets seem to expect a new ceasefire announcement soon between Washington and Tehran.
THE IMPORTANCE OF THE RED SEA
The Red Sea, and in particular the Bab el-Mandeb Strait, are two key nodes for global oil trade. Over the years, however, their importance has diminished due to Houthi attacks on merchant ships, which have pushed shipowners to avoid the area and choose the longer and more expensive route around Africa. In 2023, almost 10 percent of global maritime trade passed through the Bab el-Mandeb Strait; last year, however, the share had dropped to 3 percent, according to estimates by Clarksons Research cited by Bloomberg.
The Gulf war between the United States and Iran has restored importance to Bab el-Mandeb, which – as mentioned – has allowed Saudi Arabia to compensate for the closure of the Strait of Hormuz and continue exporting oil. In theory, Riyadh could also bypass the Houthi embargo by sending its crude shipments through the Suez Canal, in Egypt: this is not always a feasible solution because – besides longer times to reach Asian markets, for example – not all tankers are sized for navigation along this waterway.
