Houthi Advance Sparks Oil Supply Fears Amid Red Sea Seizure
The Houthi rebels in Yemen have taken control of two strategic islands in the Red Sea, further solidifying their grip on key shipping routes. The seizure of Greater and Lesser Hanish islands marks a significant advancement for the Iran-backed group, which has been rapidly expanding its presence along Yemen's Red Sea coast.
The islands are situated approximately 160 kilometers north of the Bab al-Mandab strait, a critical chokepoint that connects the Red Sea to the open ocean and links Saudi Arabia's Asian markets. The Houthi leadership has claimed it is not seeking to block all commercial shipping in the Red Sea, only targeting ships linked to Saudi Arabia.
The swift capture of these islands has left Yemen's Saudi-backed government scrambling to regain lost territory, while Riyadh faces mounting pressure from attacks on a crucial oil pipeline by Iran-aligned militants in Iraq. The situation has pushed Saudi Arabia to remain on high alert, with air alerts flashing across the country daily.
As concerns grow over the world's oil supply, analysts warn of an impending crisis. The disruption of Saudi Arabia's east-west pipeline could lead to a prolonged shortage, potentially driving up global oil prices. According to Tim Waterer, chief market analyst at KCM Trade, 'the big question for traders right now is the duration of the east-west outage.' With an estimated 2.6 million to 4 million barrels of oil per day at risk of disappearing from the market, Rystad Energy's Janiv Shah notes that recent price jumps demonstrate the market's response to a significant loss of supply.