Bab el-Mandeb Attacks Threaten Saudi Arabia's Red Sea Export Route as Hormuz Stays Closed
Yemen's Houthis claiming strikes on two Saudi oil tankers near Bab el-Mandeb now threatens the secondary route keeping Gulf crude moving since Hormuz closed.
Yemen's Houthis said on Friday (2026-07-24) that they struck two Saudi oil tankers near the Bab el-Mandeb strait, targeting the same waterway through which two Chinese supertankers carrying roughly 4 million barrels of Saudi crude had just cleared heading north out of the Red Sea. Saudi Arabia had been routing oil west to its Yanbu terminal and southward through Bab el-Mandeb since the Strait of Hormuz became largely impassable — a secondary path that is now under direct attack.6
Goldman Sachs estimated that nearly 9 million barrels per day moved through Bab el-Mandeb over the past month. Close to 4 million b/d of that flow would be difficult to reroute if both Hormuz and Bab el-Mandeb remain effectively blocked, the bank said, leaving traders to price a world in which two of the most consequential oil transit passages are simultaneously inaccessible.6
The inventory situation makes that prospect particularly uncomfortable. EIA data estimated average global crude oil inventory declines of 5.1 million b/d throughout the second quarter of 2026 — a drawdown pace that has left the market far thinner than it entered the year. Combined U.S. crude and product reserves fell 52 million barrels over four consecutive weeks of declines, according to reported figures.4,1
Physical tightness showed up at Cushing, Oklahoma through most of early summer. EIA data show storage there fell below 20 million barrels during the week ending June 19 and held under that floor through the week ending July 10 — a range where operational constraints on blending and pipeline logistics become binding. When Cushing first dipped below 20 million barrels in mid-June, the ICE Brent crude front-month and NYMEX WTI crude front-month spread collapsed to near zero, eliminating a geographic premium that normally reflects the relative balance of inland crude supply against refinery demand.5
The supply hole behind all of this is the Strait of Hormuz. The strait has been largely closed since the U.S.-Israel military campaign against Iran began, removing close to 14 million barrels per day — 14% of global crude output. The Economist reported in May 2026 that at least 2 billion barrels would disappear from the year's total even if Hormuz had reopened on May 17, 2026. It did not.2
Goldman Sachs has shifted its position sharply. During the week of June 29, 2026, the bank had warned that a global race to rebuild depleted inventories would not prevent a massive supply glut arriving next year, based on what then appeared to be progress toward Hormuz normalization. By early July 2026, Goldman reversed that assessment, warning that renewed hostilities in the Persian Gulf threatened an extended disruption and that Middle East oil production remained 10.5 million b/d below pre-war levels.3
Non-OPEC producers have partially filled the gap, but not at the scale needed. Venezuela and Norway each added 200,000 b/d and Brazil contributed a further 100,000 b/d following the initial disruption. Combined, that is 500,000 b/d against a disruption measured in tens of millions per day.2
Frederic Lasserre, head of analysis at Gunvor Group, said at an industry conference in late April 2026 that markets risked hitting tank bottoms — the minimum inventory volume needed to keep storage and distribution systems physically operational — if the Hormuz closure extended another month. Three months later, the strait remains closed.1
A 2-million-barrel build in U.S. crude stocks for the week ended July 17, 2026 offered bears something to work with. But refined product prices suggest the stress is not easing: diesel, gasoline and jet fuel prices rose 60-120% after the Gulf lost 4.4 million b/d of refined product exports. NYMEX WTI crude front-month stood at $85.88 per barrel and ICE Brent crude front-month at $96.78 per barrel at Friday's (2026-07-24) close, with the roughly $11 Brent premium reflecting heavier international supply pressure than Cushing's domestic signals alone would indicate.6,2
Whether shippers now avoid Bab el-Mandeb crossings is the most immediate variable. Goldman Sachs noted that shippers may hesitate given unclear ceasefire terms, and hull war risk insurance for vessels transiting the strait will likely jump sharply following demonstrated attacks on Saudi tankers. The Cape of Good Hope alternative adds weeks to voyage times per cargo — additional freight costs that would land on refined product markets already operating below historical buffer levels.3,6