Houthi Advances in Red Sea Disrupt Oil Exports and Drive Prices Higher
The Iran-backed Houthi rebels have made significant advances in the Red Sea, capturing strategic positions and ports in the Bab el-Mandeb Strait. This move puts upward pressure on oil prices, making it more difficult for Saudi Arabia to export its oil via its East-West pipeline.
Saudi's oil production dropped to its lowest level since 1990 in August as the Houthis gained control. The Houthi advance was with direct guidance from Iran's Revolutionary Guards, seeking a new front in the Iranian conflict.
Iran promised more help to the Houthis with funding, weapons, and senior officer advisors. The Houthi capture of key positions has contributed to surging oil prices, reaching $109 a barrel on September 10. Brent crude oil traded just under $104 a barrel on September 11 after a 6% rise.
U.S. diesel prices averaged more than $6 a gallon for the first time, and gasoline prices averaged $4.30 a gallon on September 11. The Houthi advances have also disrupted international trade, as between 12 and 15% of global seaborne commerce passes through the Red Sea annually.