Oil markets are bracing for a second chokepoint crisis as tankers begin to turn around in the Red Sea

The math of moving Middle East crude to global markets got dramatically worse this week. On Tuesday, only three commodity vessels transited the Strait of Hormuz, the lowest daily count since early May, and by early Wednesday the waterway showed no observable traffic at all. That was already the story oil traders were bracing for as the reignited U.S.-Iran war grinds into its second week. Then a second front opened. Yemen's Houthi militant group declared it would deny safe passage through the Bab el-Mandeb Strait to any vessel calling at Saudi Arabian ports, putting the alternative route Saudi Arabia had been leaning on under direct threat.

The evidence is showing up in tanker tracks, not press releases. The LPG tanker Gas King, after loading at the Saudi port of Yanbu, reversed course to exit via the Suez Canal instead of continuing south. The supertanker New Explorer, carrying Saudi oil bound for Singapore, is idling in the Red Sea showing a "not under command" status. The Aframax vessel Lahore halted after picking up a Saudi cargo. The picture is fluid: the Chinese VLCC Xin Long Yang, which had earlier U-turned, has since reversed again and resumed its original route toward Bab el-Mandeb. Some Asian buyers are still sending ships in, hoping to complete pickups before the window closes.

Why the Red Sea Route Suddenly Matters More

The Bab el-Mandeb corridor became the industry's insurance policy after Hormuz risk went vertical. Saudi Arabia was exporting record volumes from its Red Sea terminals just before the Houthi threat emerged, roughly 5.9 million barrels a day from the two Yanbu terminals in the week ending July 17. That is a large, currently-flowing volume of crude now sitting behind a maritime question mark. The Joint Maritime Information Center warned late Tuesday that "the Houthis have completed preparations to attack shipping, including the deployment of missiles and drones."

Rerouting carries real costs. Shifting Yanbu-to-Asia flows around Africa instead of through the Red Sea could affect several million barrels a day and add roughly a month of transit time for some Asian refiners' cargoes. That is a working-capital shock and a physical-inventory shock at the same time.

What the Market Is Pricing

Crude has moved accordingly. Brent crude futures are up more than 25% this month, and both benchmarks jumped again on the tanker news, with WTI trading near $88 and Brent near $95 as of Wednesday's reporting. That is a sharp reversal from mid-July, when Brent had drifted back to $81.62 on July 13 and WTI to $79.20. The May playbook, when WTI briefly touched $112.25, is being pulled off the shelf.

The pain is already leaking to the pump. U.S. regular gasoline jumped $0.15 in a single week to $4.00 a gallon on July 20, reversing a month-long slide and pushing prices back into the 76.9th percentile of the past year. The May peak was $4.50.

What to Watch

The chokepoint remains open. Loadings at Yanbu were still continuing as of Wednesday, and vessels are making individual calls in real time. Oil futures will keep swinging on headlines, but the signal to watch is the daily transit count at both Hormuz and Bab el-Mandeb over the next two weeks, and whether the Houthis follow through on a single high-profile Saudi-linked tanker. If both chokepoints stay constrained into August, the EIA's May scenario, in which global oil inventories decrease by 2.6 million barrels per day this year, starts to look optimistic rather than cautionary.

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