The Houthi advance in Yemen raises concerns about a key shipping choke point

FRANKFURT, Germany (AP) — The capture of the Red Sea port of Mokha and a strategic island by Iran-backed Houthi rebels in Yemen brings their forces to the heart of a key choke point for the global economy: the Bab el-Mandeb Strait leading out of the Red Sea.

The Houthis took Mokha on Thursday and on Friday captured Mayun, also known as Perim, off Yemen’s coast, two officials said, in a swift advance that extends their reach near one of the world’s key commercial lanes.

The strait had been a vital route for crude oil supplies from Saudi Arabia to Asia after shipping through the Strait of Hormuz was restricted due to threat of Iranian attack — until Houthi targeting of Saudi tankers largely ended that safety valve.

The Houthi advance is focusing renewed attention on the Bab el-Mandeb Strait and further risks to shipping there, despite efforts by the Houthis to reassure shipowners that vessels other than those covered by their embargo on Saudi-linked shipping remain safe.

Bab el-Mandeb had served a key workaround for Saudi oil exports

The Strait of Hormuz was long the main highway for Saudi oil. But when Iran choked off most ship traffic at the Strait of Hormuz, the Saudis ramped up shipments through a pipeline running across the desert to Yanbu on the Red Sea.

Oil loaded on tankers in Yanbu could head out of the Red Sea through the Bab el-Mandeb Strait and then east to Asia. That helped the Saudis maintain a share of their exports to customers there.

The Saudi Ministry of Energy said Friday that it had shut down the pipeline as “a precautionary measure” after it was attacked the previous day but did not specify who carried out the attacks.

The Red Sea route helped keep global oil prices in check, along with other improvised alternatives. In recent weeks the U.S. military has guided tankers through the Strait of Hormuz in defiance of Iranian demands that ships pass through a vetting lane near the Iranian coastline. And the United Arab Emirates has used a pipeline to Fujairah on the Gulf of Oman to skirt the Strait of Hormuz.

Houthi attacks on shipping through the Bab el-Mandeb Strait started in late 2023 over Israel’s war in Gaza, leading many companies to abandon the route because of safety concerns. Traffic overall remains down some 60% from levels before then, although it remains a key freight route for goods moving between Asia and Europe.

Alternate routes have helped restore much of the Middle East oil flows

In August, alternative routes helped restore some two-thirds of the roughly 15 million barrels that transited Hormuz before the war. That took some of the economic pressure off the U.S. amid politically sensitive higher gas prices ahead of the midterm elections.

However, Houthi threats have weighed heavily on Saudi oil exports in the Red Sea. In August, Red Sea oil loadings fell from 3.8 million barrels per day to 2.2 million barrels per day, according to the International Energy Agency. Overall, Saudi supply fell 2.3 million barrels per day to 6 million barrels, the lowest in three decades, according to the IEA.

By now, “Saudi shipping has largely routed away from this risk anyway,” said Richard Meade, editor-in-chief of Lloyd’s List.

While the Houthi advance “doesn’t change the immediate risk profile” because Saudi and Israeli shipping is already high risk, it does raise the question of whether the Houthis, who have insisted that other shipping is safe, will expand their threats if they face further attack, Meade said.

“It puts the Houthis in a strong position to take further control if they want to,” he said.

Meanwhile, increased attacks on shipping in the Strait of Hormuz this week have put use of the U.S. route on hold. Iran said it attacked 10 ships there Wednesday after the U.S hit five Iranian tankers.

The Suez Canal is a workaround for the workaround

With the Houthis threatening Bab el-Mandeb, Saudi tankers have turned northwest instead of southeast from Yanbu and headed for the Suez Canal.

Tankers that are too big to pass through the canal have offloaded oil at Ain Sokhna in Egypt to a pipeline to Sidi Kerir on the Mediterranean coast, where the oil is picked up by tanker. Some 70% of Yanbu crude exports are now heading that way, either by pipeline or by tanker, according to Lloyd’s.

That, however, is a time-consuming and expensive workaround for customers in Asia, since ships must then transit the Mediterranean, pass the Strait of Gibraltar and sail around the Cape of Good Hope at the southern tip of Africa. The Suez route enables the Saudis to redirect as much as 3 million barrels per day.

But that more than doubles transit time to an Asian destination like South Korea, from 24 days to 54 days, according to senior research analyst Victoria Grabenwöger at energy data firm Kpler.

That adds to the cost, given that tankers cost tens of thousands of dollars per day to charter even in normal times, while prices have risen in some cases above $100,000 per day during the current global energy turmoil.

David Mchugh, The Associated Press