The Houthis' capture of the Yemeni port city of Mocha adds a new layer of uncertainty to global energy markets, threatening to further constrain critical oil export routes through the Bab el-Mandeb Strait, according to Martha Tallas, a senior manager in Argus' consulting and analytics division, in a Friday note.
The militant group's seizure of Mocha deals a blow to the southern approach of the Bab el-Mandeb, a key energy chokepoint that has served as a primary outlet for Saudi crude bound for Asia since the US-Iran conflict disrupted shipments via the Strait of Hormuz.
Tallas said the immediate market impact of the port's seizure is projected to be contained because Saudi flows via the strait had already dropped precipitously before the capture.
Houthi attacks targeting Saudi oil tankers, the East-West pipeline, Yanbu facilities, and the 400,000 barrel-per-day Jizan refinery had already driven Saudi Red Sea exports through Bab el-Mandeb down from about 4 million b/d in June to just over 400,000 b/d by August, the analyst said, citing Kpler data.
Saudi Arabia, which transports crude across the kingdom via the 7 million b/d East-West pipeline for loading at Yanbu, has rerouted shipments north through the Suez Canal, Egypt's Sumed pipeline, and back through the Strait of Hormuz to bypass the southern Red Sea bottleneck.
Though the broader fallout will hinge on how shipowners react to the deteriorating security landscape, Tallas said that the development heightens market fragility and could underpin upward pressure on prices.
However, broader oil markets remain preoccupied with ongoing diplomatic efforts. Tallas said that traders are weighing potential de-escalation talks between Iran, Oman, and the GCC that could ease tensions in the Hormuz.
The Houthis have reportedly continued their advance along Yemen's western coast, setting their sights on Dhubab and Perim Island, which commands the narrowest nautical corridor of the Bab el-Mandeb strait.