Saudi Crude Rerouting Hits Second Chokepoint as Houthi Blockade Threat Mounts
Houthi attacks on Saudi tankers have put the Red Sea bypass of the closed Strait of Hormuz under pressure, threatening more than 4 million bpd of exports.
ICE Brent crude front-month stood at $88.10 a barrel as of 2026-08-30, down more than $11 from the $100 peak reached Thursday (2026-07-23), when Houthi forces reported striking two Saudi oil tankers in the Red Sea. The supply disruption that triggered the July rally has not been resolved.7
Saudi Arabia had redirected more than 4 million barrels per day of crude exports onto Red Sea shipping lanes after Iran moved to effectively close the Strait of Hormuz more than three months earlier. The Houthis declared a naval blockade on Saudi Arabia on Monday (2026-07-20), targeting exactly that bypass corridor.1,5
The overlap is damaging. Roughly 7 million barrels per day transit Bab el-Mandeb, as Reuters noted, against pre-war Hormuz traffic of around 20 million bpd. Around 13 million bpd had already been removed from normal supply channels by the Hormuz closure before the Bab el-Mandeb escalation, according to oilprice.com.5,1
Physical markets moved before the headlines settled. The tanker Amazon departed Saudi Arabia's Yanbu port with more than 1 million barrels of crude bound for India, then switched its destination to the Suez Canal, shipping fixtures showed. The vessel is owned by Dynacom Tankers Management.3
Suez is a constrained workaround. Supertankers cannot transit the canal, which means large crude cargoes either require lightering operations or must be routed around Africa's Cape of Good Hope — weeks longer, substantially more expensive, and reducing prompt availability in receiving markets, analysts noted.1
"It's a cacophony of bad news at the moment," said Sasha Foss, an analyst at CSC Commodities, a division of Marex Group. An analyst at MarineTraffic said Wednesday (2026-07-22) that the "Bab el-Mandeb risk picture is deteriorating," describing the Houthi naval blockade as a new escalatory front in the conflict.3,4
FX Empire put a $120 price target on Brent in the event of a full Bab el-Mandeb closure. During the week of July 13 (2026-07-13), Saxo Bank cited Bloomberg data showing crude up as much as 65% year to date; over the 12 months to July, both Brent and WTI were up more than 50%, oilprice.com reported.2,5
Part of Brent's retreat from $100 reflects buffers the market has identified. China held a crude stockpile exceeding 1.2 billion barrels at the time of the July escalation, oilprice.com noted. U.S. crude inventories rose by 2 million barrels in a recent weekly reading, FX Empire reported. Goldman Sachs expected oil to retain most of July's gains through August, supported by lower Middle Eastern output and seasonal demand.1,6,7
The IEA noted that existing Gulf pipelines cannot replace normal Hormuz volumes, and any new capacity expansion requires years and billions of dollars in investment. Saudi Arabia's Red Sea rerouting was the fastest available alternative.8
Each tanker diverted to Suez narrows the options further. FX Empire's $120 scenario requires a full Bab el-Mandeb closure; what exists as of late July is a declared blockade backed by confirmed tanker attacks, with enforcement still inconsistent. The crude market, priced where it is, is betting the disruption stays partial.2,7,5