Houthi declared a maritime blockade on Saudi Arabia
On Monday, Houthi forces in Yemen, linked to Iran, officially declared an immediate maritime blockade against Saudi Arabia, according to Reuters. This has brought the war between the US and Iran to the southern entrance of the Red Sea, and threatens a vital export route that Riyadh uses to avoid disruptions in the Strait of Hormuz.
Cause of the blockade
According to information from the Houthis, this "maritime embargo" was introduced as a retaliation measure for what the group described as a Saudi Arabia siege of Yemen. As of press time, Riyadh has not yet responded to this announcement.
Impact on the global oil market
Previously, Iran directed the Houthis to prepare to close the Bab el-Mandeb Strait if the US continued to attack Iran's infrastructure. A complete shutdown could disrupt oil shipments equivalent to about 7% of global supply, according to Reuters, leaving Saudi Arabia struggling at both ends of its export system as tanker traffic through Hormuz remains sharply reduced.
Continuous US attacks
The Houthi statement comes after nine consecutive nights of US attacks on Iran. Tehran reported air strikes in Tabriz, Chabahar, Konarak, Bandar Mahshahr and Bandar Imam Khomeini. Iran's Revolutionary Guard also said it had attacked US military facilities in Jordan, Kuwait and Syria. Kuwait also reported another attack on a desalination plant, causing a fire.
Situation of oil transportation through the Persian Gulf
Oil shipping through the Gulf continues to deteriorate. Satellite images examined by Reuters showed there was just one ship-to-ship oil transfer outside Hormuz on July 18, down from three a week earlier. Maritime sources estimate that only two or three oil transfers have taken place in recent days, and the number of tankers passing through Hormuz fell to an average of two ships per day last week, from eight ships per day in late June and early July.
Oil market reaction
Brent oil prices temporarily traded above $90 per barrel following the blockade announcement, before falling again as traders assessed reports of a renewed ceasefire attempt. Iran has received a 10-day ceasefire proposal, and both Tehran and Washington have left open the possibility of restarting negotiations. Afterwards, Brent oil prices traded near $88.04 per barrel, while West Texas Intermediate fell to around $82.29.
Event summary
| Event | Day | Affect |
|---|---|---|
| Houthi declaration of maritime blockade | Monday | Threatens Saudi Arabia's oil export route |
| US attacks on Iran | Continuously for 9 nights | Increased tension in the area |
| Brent oil price fluctuations | Right after the blockade | Fluctuated from 90 USD to 88.04 USD |
This event not only affects the regional political situation but also has a major impact on the global oil market, making investors and governments need to closely monitor further developments.