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Saudi Arabia has quietly adapted to what amounts to the greatest disruption of modern energy markets since the pandemic-induced global lockdowns.
Just like back then, the world has witnessed the choking off of some of the most voluminous supplies of oil. Unlike back in 2020, this disruption is entirely the result of geopolitical, rather than biological, reasons.
The Strait of Hormuz (SoH) has been shut down since the start of the US-Israel war against the Islamic Republic of Iran.
Many of the Gulf Arab states, which are highly dependent upon the SoH to move their supplies to and from the Middle East, have been unable to move those critical supplies to the global market for months.
There does not appear to be any abatement anytime soon in this condition.
Therefore, the world is experiencing shortages, price increases, and overall discomfort that could transmogrify into total economic pain.
Riyadh, however, slyly shifted its energy transportation away from the SoH and toward the Red Sea lifeline.
Using pipelines, the Saudis have transferred their energy to their Red Sea ports, where ships take their energy supplies via the Bab el-Mandeb Strait, and to the world market beyond.
The Iran-backed Houthi movement in Yemen, and their threats to key routes, should concern policymakers and energy professionals, as these actions could directly affect global energy stability.
Bab el-Mandeb Is Crucial
The Bab el-Mandeb Strait sits at the southern entrance to the Red Sea between Yemen and the Horn of Africa. Although far less famous than the SoH, it is one of the world’s most strategically important maritime passages.
The geography also favors the Houthis.
Inside Yemen, the Houthis control significant portions of the country’s Red Sea coastline, placing it within close range of commercial vessels transiting the narrow waterway.
Over the last several years, the Houthis have repeatedly demonstrated their ability to attack merchant shipping using drones, missiles, and explosive boats–in much the same way that the Iranians have shown the world they can do in the SoH.
Those previous Houthi attacks established that commercial shipping through the Bab el-Mandeb can–and will–be disrupted without the Houthis possessing a conventional navy.
And the group has repeatedly threatened to blockade the Bab el-Mandeb and Red Sea if the Iran War continues, driven by their opposition to Saudi Arabia and their desire for leverage.
As the Saudis are their primary adversaries, the Houthis see this as an opportunity for retaliation, especially when Saudi Arabia’s energy exports are already under pressure, making their threats more consequential.
Millions of Barrels Impacted
According to maritime shipping data, Saudi Arabia has been exporting around 3.6 million barrels per day of crude oil and refined petroleum products through the Red Sea.
Before the war with Iran, only a small share of Saudi exports used this route. Most shipments went through the SoH.
But the pattern suddenly and drastically changed once the Iran War began in earnest.
If the Houthis succeed in preventing Saudi exports through the Bab el-Mandeb, roughly four percent of global oil supply could be removed from the international market in addition to the disruptions already affecting shipments through the SoH.
Such a reduction would represent one of the largest sudden constraints on oil supplies since the conflict began.
Alternative Routes Are Limited
Riyadh still possesses other export options, but each comes with significant limitations. One possibility involves rerouting oil toward the Mediterranean through Egypt’s SUMED pipeline system before loading it onto tankers.
Another possibility involves utilizing the Suez Canal for refined petroleum products.
Yet, neither alternative route fully meets the needs of Saudi Arabia and the region when it comes to exporting energy supplies. Regional and global actors are exploring options such as increased use of the Suez Canal or developing new pipelines.
Still, these solutions face capacity, logistical, and political challenges that could delay or limit their effectiveness in mitigating Houthi threats.
For example, the SUMED pipeline cannot handle all of the volume currently moving through the Strait of Bab el-Mandeb. Capacity constraints mean some exports would require still more alternative routes.
That adds time, complexity, and cost to the Saudi export operation. As for the Suez Canal, the Very Large Crude Carriers (VLCCs) cannot transit the canal because of their draft.
Because of that complication, cargoes often are transferred or partially unloaded before passage, which again increases costs and logistical complexity.
To sell their energy to Asia under the constrained conditions imposed by a Houthi-blockaded Red Sea, Riyadh would need to reroute its wares via the Mediterranean route.
Energy from Saudi Arabia would no longer flow straight to Asia via the Red Sea and Indian Ocean routes. Instead, tankers would take a circuitous route via the Suez Canal and then around the Cape of Good Hope, adding weeks to the journey.
That longer voyage increases shipping costs while tying up tanker capacity for extended periods.
The Shipping Markets Are Already Freaking
Even before the blockade was implemented, shipping behavior changed.
Maritime tracking data indicated that two oil tankers, the Rodos and Xin Long Yang, reversed course while approaching the Bab el-Mandeb Strait following the Houthi threat.
Such diversions show how rapidly security concerns change business calculations in the shipping industry–and how those changed calculations deeply impact the economy (by raising the price on basically everything).
Skepticism Abounds
Despite the seriousness of the Houthi threat, oil markets remain disconnected from the geopolitical realities and the spasms occurring in the global shipping market.
Despite the current $91 per barrel prices, the skepticism among energy analysts about the true threat level should make the audience cautious, recognizing that underlying risks remain.
Should the Houthis demonstrate an actual ability to sustain attacks on commercial shipping through the Bab el-Mandeb.
At the same time, disruptions continue plaguing the SoH; Saudi Arabia would lose much of the redundancy it has relied upon since the war with Iran began.
The combined pressure on the Bab el-Mandeb and the Strait of Hormuz underscores the need for coordinated policy responses, as global energy security depends on these critical routes.
About the Author: Brandon J. Weichert
Brandon J. Weichert is Senior National Security Editor. He also manages The Weichert Brief on Substack. Weichert also hosts “National Security Talk” on Rumble. He is the author of four bestselling national security books, the most recent of which is A Disaster of Our Own Making: How the West Lost Ukraine (Encounter Books). Follow him via Twitter/X @WeTheBrandon.
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