Hassan Rouhani Iran, Iran-backed Houthis, Saudi-led coalition Yemen, Gulf news, Iran foreign policy, US Iran policy, Strait of Hormuz, global oil prices, global oil trade, Saudi oil

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Yemen Crisis Spills Over into the Red Sea

The Houthi attack on a Saudi crude carrier has been interpreted as an indication that Iran may make good on its promise to disrupt shipping in the Strait of Hormuz.

On July 25, Yemen’s Houthi rebels attacked a Saudi Very Large Crude Carrier (VLCC) near the Bab-al-Mandab strait, causing Riyadh to unilaterally suspend oil shipments through the maritime artery. Saudi Arabia’s decision to suspend oil shipments through Bab-al-Mandab is not only about security, but is also a move aimed at changing Western discourse about the Yemen War and turning more attention to the Houthis’ threat to American and European economic interests rather than the Saudi-led coalition’s actions inside Yemen.

As Sadad al-Husseini, a former senior executive at Saudi Aramco, put it: “Rather than allowing these hostile maneuvers to go unnoticed in the eyes of the world, the Saudi (energy) minister has placed Iran’s subversions of the whole global economy under the spotlight for everyone to see.” Houthi-run Almasirah news channel was first to report the July 25 attack. Conflicting sides have reported contradictory stories. Houthis claim that they have damaged the Saudi battleship Dammam, whereas the Saudi media claim that two of their VLCCs were targeted, but that the Houthis failed to inflict any serious physical damage or casualties. Saudi Arabia has yet to release the names or images of the vessels. It could have been Al-Mahfoza carrier, transporting crude oil from Ras Tanura to Jazan.

According to Saudi and Yemeni officials, the Houthis launched the attack from the besieged port city of Hodeida, which is currently subject to an UN-regulated ceasefire process. Saudi and United Arab Emirates-led coalition forces launched an offensive to recapture the Red Sea port on June 13, but paused the offensive on July 1 to allow for the UN-mediated settlement.

Brent crude oil futures increased 0.6%, reaching $74.35 per barrel on the day of the Houthi attack and Saudi Arabia’s decision to suspend shipping through the maritime artery. 

Economic and Geopolitical Context

The Bab-al-Mandab strait is one of the most vital transit corridors in international maritime trade. Although the throughput capacity of the strait is almost three times less than the Strait of Hormuz, it plays an indispensable role in the supply of crude oil and petroleum products to European and Asian markets. Roughly 10% of the global oil trade transits this maritime chokepoint.

Navigation through the strait is both northbound and southbound. The narrowest point of the transit corridor is between Perim Island and the Arabian Peninsula. Perim, a volcanic island, divides the strait into two passages. The western part is not suitable for navigation, the eastern passage is used for international shipping. UAE-trained pro-government forces have been controlling the island since regaining it from Houthi rebels earlier this year.

Any disruption of the navigation through the strait can prevent northbound oil tankers from the Persian Gulf from reaching the Suez Canal or the Suez-Mediterranean (Sumed) pipeline complex. The bulk of Europe’s oil and almost all of its jet fuel imports are transported through the strait. Crude vessels carry about 1.5 million bpd of crude oil produced from Saudi Arabia, Kuwait and Oman to European ports, while Iran and Iraq export around 1 million bpd through the strait to the European Union and Turkey.

Riyadh immediately took advantage of the recent escalation in tensions between Washington and Tehran to reify the rhetoric around destabilizing Iranian activity in the region. The attack came almost 20 days after Iranian president Hassan Rouhani’s threats to close the Strait of Hormuz and more recently the exchange of threats between the US President Donald Trump and Rouhani. The Houthi attack has been immediately interpreted by the Saudis as an indication that Iran may make good on its promise to disrupt shipping in the Strait of Hormuz.

Immediately after the attack, Yemeni vice president, Lt. Gen. Ali Mohsen, was quick to blame Iran for trying to disrupt international shipping and undermining the peace process. The Saudi-led coalition had repeatedly claimed that Houthis were not committed to the peaceful regulation of the conflict and this disruption and were using the peace process to deploy more forces. Hence, the attack on a crude carrier could be easily exploited to demonstrate that Houthis are not committed to the peace process in order to justify its military campaign against rebel-controlled Hodeida. It is too early to predict whether there will be further trade disruptions in the strait as Saudi Arabia is so far the only country to temporarily suspend its shipments.

To the Negotiating Table

The July 25 attack against Saudi vessels must be understood within the context of the Iran-backed rebel militia stepping up its aggression against the kingdom and the UAE, underscored by the recent Houthi-claimed drone strike targeting Abu Dhabi’s airport. The Houthi fighters are determined to bring their Arab Gulf enemies to the negotiating table by demonstrating that continued fighting will leave them only more vulnerable to growing threats to their vital economic and security interests.

The Houthis’ determination to speed up the process of bringing Riyadh and Abu Dhabi to the negotiating table with a genuine commitment to make painful concessions and compromises for the sake of conflict resolution builds up against the backdrop of an increasingly anti-Iranian foreign policy waged by the United States — underscored by Washington’s withdrawal from the Iran nuclear deal — and Saudi Arabia, which has made clear the kingdom’s position in favor of regime change in Tehran.

The Houthis’ July 25 attack sends a message not only to Riyadh about the Houthis’ capacity to attack Saudi Arabia’s core interests as an oil exporter, but also signals Iran’s capacity to target America’s geo-economic interests in the Red Sea via Tehran’s proxies and partners. Unquestionably, the US is vulnerable to Iran’s capacity to attack Washington’s interests asymmetrically in the waters near the strategically-prized Bab-al-Mandab, which must be considered as the Trump administration steps up rhetoric against the regime in Tehran and implements increasingly aggressive policies aimed at pushing back Iranian influence in Yemen and other parts of the Arab and Islamic world.

Odds are good that as Saudi Arabia and the UAE continue to make their case against Iran before the West and the international community at large, their leaders will strongly emphasize how the Iranian-backed militias in Yemen are threatening global trade near one of the busiest shipping routes in the world. Ultimately, while Saudi and Emirati officials have been keen to downplay Houthi missile and rocket attacks that have reached their soil, Riyadh and Abu Dhabi will likely hype the Houthis’ strikes against targets in the Red Sea in pursuit of greater international support for their operations in Yemen.

*[Updated: August 2, 2018, at 15:45 GMT.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: chethalan / Shutterstock.com