By Anna Cooban, CNN
London (CNN) — Attacks on commercial ships in the Middle East this month have all but closed the vital Strait of Hormuz to tankers, upending the oil market and sending producers in search of other routes to get their fuel to buyers around the world.
One of the few alternatives goes through the Red Sea. Saudi Aramco, the world’s top oil producer, said last week that it would reroute millions of barrels of crude – ordinarily loaded onto ships in the Persian Gulf and transiting the strait – via a pipeline running to Saudi Arabia’s western port of Yanbu in the Red Sea.
The number of daily oil loadings at the port has already more than doubled this month compared with the daily average last year, according to data from Kpler, a trade data and analytics company.
But now even that lifeline is at risk.
On Monday, Iran called US naval facilities in the Red Sea “potential targets.”
“The presence of the US aircraft carrier Gerald R. Ford in the Red Sea is considered a threat to Iran,” said Iran’s unified military command, according to the country’s semi-official Fars news agency. “Therefore, logistical and service centers supporting the mentioned naval group in the Red Sea will be regarded as potential targets by Iran’s armed forces.”
Even before the current war broke out on February 28, the Red Sea was “not exactly a bastion of geopolitical stability,” as David Oxley, chief climate and commodities economist at consultancy Capital Economics, put it.
In late 2023, Iran-backed Houthi militants began attacking vessels in the Red Sea in retaliation for Israel’s war against Hamas. The security situation forced shipping companies to redirect their vessels around the southern tip of Africa, adding weeks onto journeys and forcing them to spend more on fuel, insurance and seafarers’ wages.
The current regional conflict and “the continued hostile posture of Houthi forces toward commercial shipping” mean that the threat level in the Red Sea is “substantial,” the United Kingdom Maritime Trade Operations Centre said in an advisory Monday.
“The group retains both the capability and demonstrated intent to conduct maritime attacks in the region,” it warned.
One Israeli source also told CNN last week that there were indications the militants might carry out attacks against Israel, which would mark a first since the war began.
‘There’s no out’
At full capacity, the Saudi east-to-west pipeline can transport 7 million barrels of crude oil per day, according to Saudi Aramco, compensating to some extent for the roughly 15 million barrels per day that would normally go through the Strait of Hormuz.
But a resurgence of violence in the Red Sea could block those diverted oil flows as well, exacerbating existing fears over global supply and pushing oil prices even higher, analysts told CNN.
If tankers carrying Saudi oil come under attack in the Red Sea, “I think we (will) then see a material price spike in oil,” said Naveen Das, a senior oil analyst at Kpler. “Because it basically signals to the market that… all of the sort of escape routes (for oil) are being targeted… There’s no out.”
Oxley at Capital Economics said that, if violence returns to the Red Sea and “completely traps” the supply of crude from the oil-rich region, he could envisage the price of Brent crude, the global oil benchmark, soaring to between $130 and $150 a barrel from its current level of around $10