The capital markets in the world have ignored Yemen’s Iran-aligned Houthis threat of Naval blockade against Saudi Arabia. Oil prices tumbled today, a day after Houthis threat while cryptocurrency market is turning green amid reports of 15-day ceasefire proposal between the United States and Iran. Pakistan and Qatar jointly floated the proposal to resume peace talks.
Brent and OPEC oil prices fell on Tuesday morning while cryptocurrencies gained a significant value.
Houthis move could threaten global energy supplies and trade beyond the Gulf, especially after disruptions around the Strait of Hormuz.
However, the Saudi-led coalition in Yemen warned that it would respond with force to the Saudi naval blockade. The coalition began protecting Saudi ships travelling through the Bab El Mandeb Strait, a key route for oil exports. Shipping insurance costs for vessels using the Red Sea have also increased amid growing security risks.
Iran had reportedly urged the Houthis to close the Bab El Mandeb if US attacks on Iranian energy infrastructure continued. A complete closure could disrupt about 7% of global oil supplies by restricting most Saudi exports.
Furthermore, the disruption would add to existing losses from the Gulf conflict, which has already reduced global oil flows by around 10%.
Red Sea oil shipments decline sharply
The Houthis said they imposed the blockade in response to what they described as an unjust Saudi siege of Yemen.
Meanwhile, crude shipments through the Bab El Mandeb have declined sharply, according to vessel-tracking data from Kpler.
The company reported a 36% drop in crude loadings over the past two weeks.
Saudi shipments from Red Sea terminals to Asian markets fell to 6.1 million barrels per day by July 13.
That figure stood at 9.5 million barrels per day on June 29.
Additionally, Saudi west coast loadings dropped to 2.79 million barrels per day from 4.23 million.
Kpler analyst Homayoun Falakshahi said crude flows through Bab El Mandeb had weakened significantly.
