Economy

Saudi Arabia suspends oil exports through Red Sea

Saudi Arabia suspends oil exports through Red Sea

This lack of production capacity must now become a major point of focus as, in addition to the ongoing Iran-U.S. confrontation in the Strait of Hormuz, Iranian backed Yemeni Houthi rebels have once again attacked Saudi oil tankers in the Red Sea.

An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 towards Europe, the United States and Asia, according to the U.S. Energy Information Administration.

Khalid al-Falih also said Riyadh made the decision after Yemen's Ansrullah forces attacked two Saudi oil tankers in the area.

On Wednesday morning, the Houthi-run al-Masirah television network reported that Yemeni fighters had launched a missile attack on the Saudi Dammam battleship off the western coast of Yemen.

A Saudi-led coalition intervened in March 2015 to support the government with air strikes contributing heavily to the more than 13,000 people killed in the war.

Brent futures rose 57 cents to $74.50 a barrel by 11:42 a.m. EDT (1542 GMT). "The Port of Hodeidah is still the launching pad for terrorist attacks".

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If the Bab El Mandeb situation deteriorates further, putting all other vessel movements at risk, or increasing insurance costs substantially, the market will soon be facing the prospect of a renewed oil price rally.

Most exports from the Gulf that transit the Suez Canal and the SUMED Pipeline also pass through Bab al-Mandeb. "One of the VLCCs sustained minimal damage", Falih said.

The Saudi-led coalition has repeatedly raised alarm that Huthi rebels threaten vessels in the Red Sea through their control of the strategic Hodeida port.

The world's largest oil exporter has kept its crude shipments flowing during previous regional conflicts, including the 1980-1988 Iran-Iraq war when the two sides sought to disrupt each other's oil exports in what was known as the Tanker War.

An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018.

"The Red Sea is a very important shipping lane".

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The main impact of the incident appears to be military, Harami said.

"What makes this attack special is the timing and rhetoric from Tehran", Reed said.

"It could be a reason for increased naval presence for many countries, mainly the United States and Russian Federation, thus resulting in an escalation of tensions", he said.

As high oil prices and improved efficiency force refineries in the USA and Europe toward closure, the industry is shifting toward the Middle East and Asia in a move fueled by a thirst for energy among emerging economies.

"Saudi Arabia can deliver 15 million bpd through its ports and has some 300 million barrels of crude in storage at home plus more overseas".

"The halt potentially offers Saudi Arabia and the United Arab Emirates an opportunity to focus global attention on resolving a civil war aggravated and turned into a regional conflict by the two Gulf states' military intervention", Dorsey said.

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The latest attack on Saudi oil tankers could strengthen Riyadh and Abu Dhabi's position ahead of possible UN-sponsored peace talks between Yemen's warring parties, which aims to avoid an all-out assault on the country's main port city of Hodeidah.