Saudi Arabia crude exports face 4% global supply risk as Houthis tighten Red Sea grip

Saudi Arabia is potentially facing a 4% global supply risk to its oil exports due to the Houthi tightening their grip on the Red Sea. The ongoing disruption to the oil supply chain has been intensified by the Houthi fighters seizing an island at the mouth of the Red Sea, further restricting their control over the Bab-el-Mandeb waterway. This development, combined with the ongoing blockade of the Strait of Hormuz, has left Saudi Arabia with limited options to ship crude to international markets.

The East-West pipeline, which transports crude across the kingdom to the Red Sea coast, is a critical component in Saudi Arabia's oil export strategy. However, the pipeline has been offline following drone attacks, leaving only the Yanbu port to store and export around 4 million barrels of crude per day. This volume is equivalent to approximately 4% of the global oil supply, and the pipeline's current inoperability could leave Yanbu's stocks to support exports for just five to seven days.

The strategic significance of the Houthi presence near the Bab-el-Mandeb is further compounded by the ongoing disruption to shipping through the Strait of Hormuz. Combined, these factors pose a severe threat to global oil supplies, potentially reducing the industry's capacity by 6%. As the Houthi's control over the Red Sea grows, Saudi Arabia's ability to maintain its oil export volumes is increasingly under threat.