Houthi Deal Excludes Saudis, Oil Markets React with Caution
A potential agreement between the US and the Houthis has significantly altered the balance of power in the Middle East. The deal excludes Saudi Arabia, which had been instrumental in securing international shipping in the Bab al-Mandab Strait, leaving its vessels vulnerable to attacks.
The Houthi rebels have taken control of the Yemeni coast and Perim Island, allowing them to continue targeting Saudi infrastructure. Recent attacks on Saudi Aramco installations in Yanbu and Khamis Mushait raise concerns about oil exports through the Red Sea route, which is becoming increasingly risky.
Riyadh has been forced to reroute logistics and transport to Persian Gulf ports like Ras Tanura, lengthening delivery times, increasing freight costs, and raising insurance rates. This has imposed a permanent geopolitical premium on crude prices.
Saudi Aramco's swift response in repairing the damaged pipeline has helped cool price fever. The company aims to restore half of the main line's capacity within days and full transmission capacity in about six weeks, removing the threat of a sudden supply paralysis.