How escalating Saudi oil crisis could drive up prices everywhere

Over the past two weeks, the Houthis in Yemen have captured strategic territory from Saudi-backed pro-government forces close to the Bab al-Mandab Strait, another trade chokepoint at the southern tip of the Red Sea which was the transit point for about 5% of global oil supplies before February.

About 5% of the global oil supply also normally leaves the Red Sea through the north, via the Suez Canal and a pipeline across Egypt to the Mediterranean.

The global market oil price is rising over concerns these shipping arteries could, like Hormuz, be even more severely disrupted by Iran and its proxies.

Before the Houthis recent advances on the south-west coast of Yemen the group declared in July it was enforcing a naval blockade of Saudi ships and ports. It said it will not attack vessels from other countries passing through the Red Sea.

US President Donald Trump has said “the world’s diesel price rise is mostly caused by the Russia/Ukraine War, not Iran”.

Analysts say the conflict – including Ukrainian drone attacks on Russian refineries – has put pressure on diesel prices as Russia is the world’s second largest diesel exporter.

But most judge the bigger cause of the recent energy price spike has been the expanding regional conflict in the Middle East.