FACTBOX: Houthi advance on Yemen port threatens key oil shipping route

Yemen-based Houthi rebels have moved into Mokha, a strategic city on Yemen's Red Sea coast, raising crude prices and stoking fears of further disruption to energy exports through the Bab al-Mandab Strait — one of the world's most critical oil chokepoints.

"Houthi gains around Mokha are unlikely to shut down Saudi or regional oil exports, but they will erode the resilience of Saudi Arabia's Red Sea export route at a strategically important moment," said Jack Kennedy, S&P Global Market Intelligence head of Middle East & North Africa Country Risk.

Saudi Arabia has rerouted most of its crude exports to its Red Sea port at Yanbu after the crisis in the Strait of Hormuz erupted.

The following are key facts regarding the impact the military developments could have on global oil markets.

Trade

• The Bab al-Mandab Strait is a narrow chokepoint, around 20 miles wide. Historically, as many as 7-9 million barrels/day of the world's crude has passed through it, though Houthi attacks have forced many ship operators to reroute since late 2023.
• In August, 1.5 million b/d of crude and condensates moved through the Bab al-Mandab Strait, down from 3.14 million b/d in July, according to S&P Global Commodities at Sea data. In June, 5.9 million b/d of crude moved through the strait.
• The Houthis declared a naval blockade on ships sailing to and from Saudi ports on July 20 that prompted a reroute of trade. Many tanker operators have treated southbound Saudi oil transits through the Bab al-Mandab Strait as completely off-limits, opting instead to leave the Red Sea via the Suez Canal and sail around the entire African continent in order to reach Asia.
• Traffic through the Bab al-Mandab Strait strengthened on Sept. 10 despite a deteriorating security backdrop in the Red Sea region. Total transits rose to 40 vessels from 36 the previous day, comprising 18 northbound and 22 southbound passages, according to CAS data.
• Saudi crude loadings of 5.6 million b/d in August included 2.8 million b/d from the country's Red Sea coast, 571,500 b/d from the Gulf, and 1.9 million b/d from Egypt. Loadings were down from 6.1 million b/d in July, CAS data showed.
• Crude loadings from King Fahd Industrial Port in Yanbu fell to 2.8 million b/d in August from 3.9 million b/d in July as Houthi strikes on the Bahri-operated Amzan VLCC off the coast of Yanbu raised security concerns for shipping through the Bab al-Mandab Strait.
• While exports from Egypt's Mediterranean terminal of Sidi Kerir were typically supplied to the European customer base, Saudi crude was also lifted from the Egyptian port in August for shipment to Japan, China, South Korea, Singapore and the US, CAS data also showed.
• About 629,000 b/d of Saudi crude was lifted from Sidi Kerir to be discharged in China, South Korea and Japan in August, CAS data showed, while a combined volume of around 250,000 b/d destined for Japan and China was loaded from Ras Tanura over the month.

Prices

• ICE November Brent futures stood at $104.27/b at 1000 GMT Sept. 11, falling 3.12% from the previous settlement. The contract had closed 6.34% higher on Sept. 10 amid news of the Houthi advance.
• Platts, part of S&P Global Energy, assessed the Yanbu-Far East VLCC rate at $104.83/metric ton Sept. 10, up 6.74% day over day and the highest since the assessment began in May.
• The LR1 rate for shipping 55,000 mt of clean petroleum products from the Red Sea to Japan rose 1.67% day over day to $152.99/mt Sept. 10, the highest in recent years and compared with $50.16/mt on July 20.
• Platts assessed Dated Brent at $120/b on Sept. 10, up 5.29% from the previous day.
• The Platts Dubai cash-futures spread weakened for a second day Sept. 11, falling by 70.5 cents/b to a premium of $28.385/b at the Asian close.
• The front-month November cash Brent-Dubai spread, or the spread that physical Brent cargoes hold over physical Dubai, narrowed by $1.575/b to minus $18.105/b on Sept. 11.

Infrastructure

• By moving south and taking Mokha, the Houthis are able to project more power into the Red Sea, Gregory Johnson at the Gulf States Institute told US news outlet PBS Sept. 10. The waterway is already congested with ship traffic, and even if the Houthis are only targeting certain oil tankers, there is less room for ships to navigate safely, he said.
• The US-led Joint Maritime Information Center did not raise the threat level for the Bab al-Mandab after the Houthis' overnight incursion, keeping the threat level at "substantial." Additional attacks are a strong possibility, the JMIC said in a Sept. 10 update.
• On Sept. 11, various media reports indicated that the Houthis had claimed Perim Island, also known as Mayyun Island.
• Capture of the small but strategically significant Perim Island in the strait would give Houthis a stronger position for close-range attacks and potential vessel seizures, though operations to lay mines remain unlikely absent a serious coalition threat, S&P Global Energy's Kennedy said.
• The East-West Pipeline connects Saudi Arabia's Eastern Province to Yanbu on the Red Sea, providing a key overland crude bypass route with a capacity of 7 million b/d.
• The SUMED Pipeline in Egypt carries up to 2.5 million b/d northbound from the Red Sea to the Mediterranean, supporting Saudi crude flows toward European and other markets.