Houthi blockade targets Saudi Yanbu oil route

The Bab el-Mandeb strait sits between Yemen and Djibouti. Just 29 kilometres wide, it carried around 7.4 million barrels of oil per day in June, roughly 7% of global output (Straits Times). On 20 July, Yemen's Houthis declared a naval blockade against Saudi shipping in this corridor (Al Jazeera). No ship needs to be sunk for that to raise fuel costs across Europe. The threat alone acts as a hidden tax on every barrel that passes through.

The announcement landed where Saudi export logistics were most exposed. When the Strait of Hormuz (the narrow exit from the Persian Gulf) became too risky for commercial shipping, Saudi Aramco rerouted supply through its backup: the East-West Pipeline, which runs from the eastern oil fields to Yanbu, a port on the Red Sea coast. Aramco pushed the line to its maximum capacity of 7 million barrels per day (Arab News). Yanbu shipments jumped to roughly 4 million barrels per day, from about 973,000 a year earlier (Al Jazeera).

Saudi Arabia solved one chokepoint by piling traffic into another. The Houthis, who have attacked more than 100 vessels in the Red Sea since late 2023, now have far more ships to threaten (The Deep Dive).

How the cost moves north

The price rises through layers, each one adding to European fuel bills before a single barrel goes missing.

First, insurance. War-risk premiums (the extra charge ships pay to enter a conflict zone) roughly doubled after the blockade announcement, rising to around 0.75% of vessel value from 0.3% (BoE Report, Forbes). Ships that avoid the Red Sea entirely reroute around the Cape of Good Hope at Africa's southern tip, adding 10 to 20 days to each voyage and tying up tankers that would otherwise carry other cargoes (Interactive Brokers).

Then fuel prices themselves. Northwest European gasoline refining margins (the gap between what refiners pay for crude and what they earn selling fuel) climbed near a four-year high of roughly $44.43 per barrel (Investing.nl). Regional tension had already pushed Brent crude (the European benchmark oil price) to $88.10 a barrel by 17 July, up 4.59%, before the formal blockade announcement layered on additional risk (Investing.com).

The sharpest European pressure point is jet fuel. In June, about 94% of jet fuel shipped from east of Suez to Europe crossed through the Suez Canal system (Cyprus Shipping News). That near-total dependence on a single corridor makes European aviation especially vulnerable. Eni chief Claudio Descalzi warned the real problem was refined products: Italy held just 46 days of jet-fuel reserves, with stocks already down 8% in April (Corriere, Marketscreener).

Who pays, and what remains uncertain

Refiners buying cargoes on short notice absorb the risk premium first. Airlines follow, because jet fuel is among their largest running costs and Europe's supply comes almost entirely through this corridor. Diesel-dependent freight and farming sectors sit next in line. Consumers feel it last, partly because fuel taxes across Europe mean pump prices move less than crude prices, and partly because hedging contracts (advance deals that lock in fuel prices) give some industries a temporary cushion.

There is a large caveat. No independent source has confirmed the blockade is being physically enforced. Vessel-tracking data showed no clear traffic drop through mid-July (The Deep Dive, TankerMap). Saudi crude loadings through the area did fall 36% over two weeks, but that reflects commercial caution — shippers choosing different routes — not an enforced closure (The National).

Shippers and insurers are already pricing in the danger, which is what makes the blockade effective even without a single intercepted tanker. Each rerouted voyage, each doubled insurance premium, each extra week at sea adds a surcharge that moves from shipping desks to refineries to airports to passengers. Whether the Houthis can sustain the threat over weeks and months depends on military enforcement they have not yet shown. The price effect has not waited for proof.