Iranian Proxy Forces Squeeze Global Oil Supplies Through Middle Eastern Conflict
Escalating conflict between Iran-backed Houthi rebels and Saudi Arabia has increased the threat to tanker traffic in the Middle East, driving up global fuel costs. The ongoing tensions have severely reduced shipping through the Strait of Hormuz since the US and Israel launched their war on Iran.
The Houthi-Saudi tension and attacks on Saudi infrastructure blamed on other Iranian proxy forces are also squeezing global fuel supplies in the nearby Red Sea. Before the war began, about 30% of oil supplies typically reached global markets by tanker from the Persian Gulf via the Strait of Hormuz (about 20%) and the Red Sea via the Bab el-Mandeb Strait (about 10%) combined.
The price of Brent crude, the international benchmark for oil, has risen to a near-4-month-high of about $108 per barrel due to the East-West pipeline in Saudi Arabia being damaged and shut. The pipeline was attacked by an Iranian proxy force last week, causing significant damage and fires.
Long-term disruption to the East-West pipeline could take about 4% of the world's oil supply offline, compounding the losses created by the Strait of Hormuz closure and the threat to Saudi ships in the Red Sea. The Houthis have declared a blockade of Saudi Arabia's Red Sea ports, making it difficult for the kingdom to export oil.