How Escalating Attacks in Yemen Impact Global Oil Trade

Red Sea Conflict Escalates as Yemen Fighting Disrupts Shipping Routes and Oil Markets

On Sunday, Yemeni government forces supported by Saudi Arabia launched attacks against Houthi forces along the Red Sea coast. The operations targeted areas near the port city of Mokha and Perim Island after Houthi fighters took control of those locations, which sit at the entrance to the Bab el-Mandeb Strait. Houthi forces responded by firing missiles toward locations inside Saudi Arabia and stated they had imposed restrictions on Saudi-linked vessels while allowing commercial traffic from other countries to continue.

The clashes coincide with a pause in diplomatic contacts aimed at addressing tensions between Gulf states and Iran. Omani Foreign Minister Badr Albusaidi announced that a planned meeting in Oman had been postponed. The session would have been the first direct discussion between Iran and Gulf Cooperation Council members on the Strait of Hormuz following the collapse of a June memorandum of understanding between the United States and Iran.

Fighting inside Yemen has intensified after a period of relative quiet. The United Nations migration agency reported that more than 82,000 people have been displaced since the beginning of September, including over 2,000 who crossed into Djibouti. Yemen’s civil war, which escalated after Saudi Arabia began a military intervention in 2015, has resulted in approximately 150,000 deaths and produced one of the largest humanitarian crises tracked by international organizations.

Saudi officials reported that a projectile hit al-Tuwal in Jazan province, injuring two people and damaging a mosque, buildings, and vehicles. Earlier in the week, authorities stated that Houthi missile and drone attacks on four southern cities injured 73 people. Houthi statements claimed strikes on the Sharurah military base in Najran region and alleged that Saudi aircraft conducted 58 airstrikes across Yemen in a 24-hour period and 129 strikes over the preceding 48 hours. Saudi authorities have not confirmed those figures.

Inside Yemen, government-aligned units said they struck targets near Mokha, Dhubab, and other sites in Taiz province, reporting the destruction of vehicles and weapons. The National Resistance, allied with the government, stated that more than 500 of its fighters had been killed on the west coast in the past month, while claiming more than 1,000 Houthi fighters were killed in Hodeida and Taiz provinces during the same period.

Oil prices rose on Monday following the reports. Brent crude futures opened at $108.23 per barrel, an increase of $3.62, while West Texas Intermediate futures opened at $103.20, up $3.15. U.S. diesel prices exceeded $6 per gallon on Friday. Oil prices had already gained more than 8 percent the previous week, with Brent moving above $100 per barrel.

Saudi Arabia closed its East-West pipeline after drone strikes damaged infrastructure in the Riyadh and Medina regions. No organization claimed responsibility for those strikes. U.S. President Donald Trump stated that Iran was “probably” responsible. The pipeline had been carrying roughly 4 million barrels per day to bypass the Strait of Hormuz.

Analyst Allison Minor noted that Houthi activity near the Bab el-Mandeb Strait could lead shipping companies to delay voyages or increase freight rates even if only Saudi-linked vessels are targeted. Alternative routes through the Suez Canal or Egypt’s SUMED pipeline have lower capacity and would extend transit times for some cargoes.

Saudi Arabia holds enough stored oil at Yanbu to maintain current export levels for five to seven days, according to reports. Analyst June Goh of Sparta Commodities stated that a short disruption would have limited effects, while a prolonged closure could lead Saudi Arabia to reduce output. The International Energy Agency reported that Gulf oil exports in August were nearly half their pre-conflict volume and that global inventories had declined by 507 million barrels since February.

Analyst Thye May Ting of Hong Leong Investment Bank projected Brent prices between $95 and $100 per barrel by year-end due to pressure at both the Strait of Hormuz and Bab el-Mandeb. Economist Mohamed Shadi presented a scenario analysis using a $110 baseline, estimating peaks of $120 per barrel if 25 percent of Bab el-Mandeb flows were halted, $145 if 50 percent were affected, and $229 in the event of a full shutdown. Other forecasts cited in the same period were lower.

A vessel in the Strait of Hormuz was struck by a projectile, causing a fire, according to the U.K. Maritime Trade Operations. Iranian state media reported that an Iranian commercial vessel was hit off the coast, killing one person and wounding four.

The IEA’s September report projected world oil supply at 100.7 million barrels per day for the year, a decline of 5.7 million barrels per day from the previous year.

Saudi Arabia has requested additional U.S. military support, according to Axios reporting. Saudi Crown Prince Mohammed bin Salman spoke twice with President Trump on Thursday seeking authorization for U.S. strikes, but the requests were declined. The United States has deployed more than 100 military advisers to Saudi Arabia to supply intelligence.

President Trump stated on Saturday that Houthi representatives had contacted his administration and indicated they preferred to avoid U.S. involvement while allowing most ships to pass. He said the situation involving one country could be resolved. Saudi Arabia could increase its own air operations or provide further assistance to Yemeni government forces, though air support did not arrive during recent fighting near Mokha despite requests.

Riyadh could also seek assistance from Pakistan and Turkey under the Mecca Joint Defence Agreement signed last month. Researcher Riaz Khokhar wrote that Pakistan might instead advocate for a multinational naval presence to secure the Bab el-Mandeb Strait rather than direct involvement.

Analyst Allison Minor suggested in July that Houthi actions may be intended to obtain concessions rather than trigger broader conflict. Other analysts told Reuters that territorial gains by Houthi forces could encourage Gulf governments to seek accommodation with Iran.

President Trump said Sunday he still expects the conflict involving Iran to conclude this year and that gasoline prices would fall sharply afterward. He previously accused Iranian authorities of extending the fighting to affect U.S. midterm elections but stated they could not continue much longer. He also mentioned the possibility of a continued U.S. presence to manage Iranian oil resources, drawing a comparison to Venezuela.

The combined effects on the two straits have contributed to higher energy prices worldwide. The duration of any sustained restrictions on either route will determine whether current price movements translate into longer-term supply adjustments.