Houthi Threats Give Oil Markets a ‘Two Chokepoint Problem’ Houthi Threats Give Oil Markets a ‘Two Chokepoint
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Markets a ‘Two Chokepoint Problem’ Bloomberg Total Views: 678 July 22, 2026 By Weilun Soon, Grant Smith, Nicholas
Lua, Julian Lee and Alex Longley (Bloomberg) — Ships continue to turn away from the southern end of the Red Sea,
after Yemen’s Iran-backed Houthi rebels announced an embargo on Saudi exports through the Bab el-Mandeb Strait, a
narrow channel that has become a lifeline for oil exports since the beginning of the US-Israeli war with Iran. Tracking
data shows two Asia-bound vessels appear to be heading north toward the Suez Canal — a diversion that could add 30
days of sailing time in some cases — while others have paused their journeys. No crude oil tankers have been seen
transiting Bab el-Mandeb since the Houthis emailed shipowners earlier this week to tell them not to cross, although
it’s possible some have done so with their transponders turned off. A disruption to traffic through the Red Sea would
pile pressure onto global oil markets, which have been roiled by renewed hostilities in the Gulf and the effective
collapse of a ceasefire between the US and Iran. Brent futures have already spiked more than 30% this
month, passing $95 a barrel. At the port of Yanbu, the main conduit through which Saudi Arabia has been able to
continue its oil exports, just two of the seven berths used to export oil were occupied on Wednesday morning, according
to tracking data — although the European Union’s naval force in the Red Sea has advised merchant vessels to turn off
their transponders if they called at ports in the Kingdom. “Middle East risk has become a two-chokepoint problem,”
Standard Chartered analysts including Emily Ashford wrote. “The cost of moving barrels is likely to increase while the
risk persists.” To keep its oil flowing to market, Saudi Arabia has shipped barrels across the breadth of the
country to its western coast and on to global markets. In the days before the Houthi threat, the kingdom had
exported record volumes of crude from its terminals on the Red Sea, shipping out 5.9 million barrels a day
from the two terminals at Yanbu in the week up to July 17, according to tanker tracking compiled by Bloomberg. The
announcement of an embargo by the Houthis threatens that flow. The militants have previously attacked merchant ships in
the southern Red Sea, forcing vessels to divert around the area. The group hasn’t struck a ship since September last
year, however, according to the EU. On Tuesday, oil tanker industry executives said shipping companies had become more
cautious about calling at the Saudi Red Sea port, though it was too early to say if that would impact chartering fees
and, crucially, loadings. The EU advised merchant vessels linked to Saudi Arabia and the US to avoid transiting near
Yemen. As in the Strait of Hormuz, ships’ attempts to disguise their positions to avoid attack makes it
difficult to accurately track movements in the region. However, there are signs that ships approaching the Gulf of Aden
from the Indian Ocean are stalling on their journeys as owners assess whether to transit. At least six crude oil tankers
destined to load crude at Yanbu have turned back or paused in the Arabian Sea, near the eastern approach to the Bab
el-Mandeb Strait, vessel tracking data show. On Tuesday, a Greek-owned Suezmax, the Amazon, which departed Yanbu with
more than 1 million barrels of crude, switched its destination to the Suez Canal. The tanker is meant to deliver its
cargo to India, shipping fixtures show. It is owned by Dynacom Tankers Management, one of the owners that carried on
sailing into the Persian Gulf at the start of the Iran war, but which has seen several of its vessels hit in both Hormuz
and the Black Sea in recent days. Dynacom didn’t immediately respond to a request for comment. Ships carrying
liquefied petroleum gas and various volumes of crude oil have also either u-turned or paused their journeys, tracking
data shows. One vessel, Xin Long Yang, has since reverted to its original route after earlier heading north, and
is now sailing toward Bab el-Mandeb. “The escalation of violence between the US and Iran now threatens even those few
Middle Eastern crude barrels that have been able to bypass Hormuz,” Braemar analysts including Henry Curra wrote.
“Unless the chaos in the Middle East can be resolved quickly, we are likely to see a re-emergence of our ‘urgency
premium’ for freight.” The Houthi militant group in Yemen is ready to attack shipping from positions near
the Bab el-Mandeb strait at the southern end of the Red Sea, according to the Joint Maritime Information Center, a
global monitoring body for naval security. The EU naval mission to the Red Sea provides escorts for civilian vessels in
the region, but has warned that it has limited assets and that ships looking for protection may face waiting times.
Unlike the Persian Gulf, the Red Sea has an escape route north through the Suez Canal, but that means significant
additional sailing times and shipping costs for companies looking to move oil to Asia. “It’s a cacophony of bad news
at the moment,” said Sasha Foss, an analyst at CSC Commodities, a division of Marex Group. “I expect things to
correct higher the longer the Strait is closed, as we no longer have the buffers.” © 2026 Bloomberg L.P.
Tags: houthi group Iran conflict red sea Red Sea reroutings Editorial Standards · Corrections · About
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