Oil Prices Rise Again After Yemen's Houthi Announces Saudi Arabia Maritime Blockade

JAKARTA - Oil prices rose after Iran-backed Houthi group in Yemen announced a maritime blockade against Saudi Arabia's shipping, exacerbating global energy supply concerns amid new attacks on tankers in the Strait of Hormuz.

As reported by CNN, Tuesday, July 21, raw Brent crude, the global oil price benchmark, rose 1.8% to $90.85 per barrel just before 08.00 am local time.

WTI, the benchmark for US oil prices, rose by a similar amount to $83.97 a barrel. Brent prices have now risen by almost $20 a barrel this month as tensions between the United States and Iran have heated up again.

Oil prices were already on the rise even before the Houthi rebels threatened Saudi Arabia's exports in the Red Sea - a vital route for the global oil market - through a blockade in the Bab al-Mandeb Strait, a narrow point (chokepoint) at the southern end of the Red Sea.

According to consulting firm Rystad Energy, Saudi Arabia has increased exports from the port of Yanbu in the Red Sea to 4 million barrels per day in an effort to avoid the Strait of Hormuz.

"Ship tracking data belonging to the company shows that about 2.5 million barrels per day of this volume is currently moving south through (Bab al-Mandeb), making this crucial alternative export route vulnerable to potential Houthi actions," wrote Senior Vice President Jorge León.

At the end of 2023, the Houthi group caused severe disruption to container shipping in the Red Sea in response to Israel's military operation against Hamas. The volume of container shipping in the waterway has not yet fully recovered.

Meanwhile, the International Energy Agency (IEA) on Tuesday warned that global energy security would worsen if the Strait of Hormuz was not reopened.

"There is no room for complacency on oil security amid escalating hostilities and the continued shrinking of available commercial reserves," said IEA Executive Director Fatih Birol.