Saudi Oil Tankers Attacked as Iran War Escalates

Yemeni Houthis, allied with Iran, launched attacks on Saudi oil tankers in the Red Sea on Thursday, causing oil prices to surpass $100 per barrel for the first time since early June. These attacks, occurring in the Bab el-Mandeb strait, force Saudi tankers to reroute to the Suez Canal and then around Africa to reach Asian markets, significantly increasing shipping times and costs. This escalation follows the U.S. signing a nuclear power agreement with Saudi Arabia on Wednesday to develop a civilian nuclear program, a move that U.S. officials aim to counter Iran's nuclear ambitions.

Jennifer Li, a senior geopolitical analyst at Rystad Energy, stated that the nuclear deal is "escalatory" and that Iran is unlikely to view it favorably. She suggested that Iran has positioned the Houthis to target Saudi vessels, contributing to a "Who blinks first?" dilemma that encourages maximalist approaches from both sides. The Houthi attacks specifically target Saudi tankers, aiming to disrupt oil shipments and exert pressure.

While the nuclear deal may be a contributing factor, Fernando Ferreira, director of the geopolitical risk service at Rapidan Energy Group, believes the Houthis are acting independently due to decades of conflict with Saudi Arabia. He noted that the Houthis are choosing to attack at a moment of broader escalation in the Iran war, capitalizing on the current geopolitical climate. Saudi Arabia was already diverting oil via pipelines to the Red Sea to avoid attacks in the Strait of Hormuz, and these new Houthi actions further complicate its oil export logistics.

The Bab el-Mandeb strait, known historically for its natural dangers, now presents an additional layer of risk for maritime traffic. The increased transit time and costs associated with rerouting tankers around Africa are expected to impact global oil supply and pricing, especially as tensions between Iran and Saudi Arabia continue to rise.