Saudi ban on Red Sea oil shipments turns the spotlight on prices
Saudi Arabia announced last week it was suspending oil shipments through the Red Sea's Bab al-Mandeb strait after Yemen's Iran-aligned Houthis attacked two ships in the waterway.
To date, no other exporters have followed suit. A full blockage of the strategic waterway would virtually halt shipment to Europe and the United States of about 4.8 million barrels a day of crude oil and refined petroleum products. Western allies backing a Saudi-led coalition fighting the Houthis in Yemen expressed concern about the attacks, but have not indicated they would take action to secure the strait.
The threat to shipping in Bab al-Mandeb has been building for some time, with the Houthis targeting Saudi tankers in at least two other attacks this year. It is not unusual to re-evaluate security after such an incident, but Riyadh's announcement also carries a political dimension.
Analysts say Saudi Arabia is trying to encourage its Western allies to take more seriously the danger posed by the Houthis and step up support for its war in Yemen, where thousands of air strikes and a limited ground operation have produced only modest results while deepening the world's worst humanitarian crisis.
"Rather than allowing these hostile manoeuvres to go unnoticed in the eyes of the world, the Saudi (energy) minister has placed Iran's subversions of the whole global economy under the spotlight for everyone to see," said energy consultant Sadad al-Husseini, a former senior executive at Saudi Aramco. "The capture of the port of Hodeidah will go a long way towards putting an end to these disruptions."
The suspension of Saudi shipments - with the implied threat of higher oil prices - may also be aimed at pressuring European allies, who have continued to support the nuclear deal with Iran following the US withdrawal in May, to take a stronger stance against Tehran's ballistic missiles programme and support for armed groups across the region. There was no official confirmation that the move was co-ordinated with Washington but one analyst said it would be astonishing if it were not, given the strategic alliance between the two countries.
No party has much appetite for an all-out conflict, but the situation can easily deteriorate. Both the Saudis and the Houthis appear to want to raise the stakes - with different goals in mind.
The risk is that one side miscalculates, eliciting a response that is stronger than anticipated.
Redirecting ships around the southern tip of Africa would cost a lot more in time and money, making it an unlikely alternative.
Instead, Saudi Arabia will probably use the Petroline, or East-West Pipeline, through which it transports crude from fields in its Eastern Province to the Red Sea port of Yanbu for export to Europe and North America.
Even before last week's attack, shipping companies had taken extra precautions, including armed guards, more lookouts at sea, sailing faster and increased contact with international navies.
Experts say the United States and other partners could provide naval escorts to tankers and take more steps to reduce the Houthis' capacity to target shipping, including arms supplies and help with logistics, intelligence and targeting.
Increased naval patrols helped curb pirate attacks in the nearby Gulf of Aden a decade ago, but Western allies are keen avoid being dragged into the Yemen war. (Reuters)