Houthis Blockade Red Sea Shipping Lanes, Oil Prices Soar

The conflict between Iran and Saudi Arabia has escalated, with Iranian-backed Houthis in Yemen announcing a naval blockade against Saudi Arabia. The Houthis warned that they would target ships attempting to transit the Bab el-Mandeb Strait, which is located at the southern entrance to the Red Sea.

On Thursday, the Houthis followed through on their threat by striking two Saudi oil tankers. One of the ships was hit, causing a global price surge for oil over $100 per barrel for the first time since May.

The Bab el-Mandeb is a narrow waterway, just 19 miles wide, between Yemen to the east and the Horn of Africa to the west. Saudi Arabia has been exporting its oil via pipeline to the western port of Yanbu, from where more than half of it is sent by ship through the Red Sea.

The full blockade by the Houthis could further hamper global oil supplies, which have already been reduced by 10% due to the closure of the Strait of Hormuz. The International Monetary Fund estimates that a full blockade would add significant economic costs for everyone involved.