- 2 months ago
Saudi Arabia has long depended on secure maritime and land-based routes to move its energy exports, and the stability of these corridors has been central to the kingdom’s economic power. The phrase “Saudi Arabia’s last oil route is now under threat” reflects more than a headline; it points to a strategic reality that has evolved over decades. As global trade becomes more complex and regional tensions intensify, the reliability of the kingdom’s remaining export pathways is being tested in ways that carry implications for oil markets, shipping insurance, energy security, and geopolitical alignment. For readers tracking Saudi Arabia oil exports, Middle East shipping risks, and global energy security, this topic has become increasingly urgent.
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00:00The Iranians have closed the Strait of Hormuz. The Houthis are threatening to close the equivalent
00:06on the Red Sea. Iran just shut down the Strait of Hormuz. The Houthis locked down the Red Sea.
00:11That means Saudi Arabia's two main oil routes are gone, and the last one left could collapse
00:15the global economy overnight. What happens when the world's oil supply has nowhere to go? Let's
00:20find out. The gate that closed, and then the second one. There's a stretch of water at the
00:26mouth of the Persian Gulf, barely 20 miles across at its narrowest point. And for most of modern
00:30economic history, it has been the single most important shipping lane on the planet. In an
00:34ordinary year, somewhere between 20 and 21 million barrels of crude, condensate and refined products
00:40move through the Strait of Hormuz every single day. That is roughly one-fifth of everything the world
00:45burns, about a quarter of all seaborne oil trade, and close to another fifth of the world's liquefied
00:50natural gas, most of it heading east toward Asia. That was the ordinary year. This is not
00:55one. On February 28, 2026, the United States and Israel launched a major military campaign
01:01against Iran, striking military, nuclear and leadership targets. Iran answered with missiles
01:07and drones, and then it answered with something quieter and far more expensive. Within hours,
01:11Islamic Revolutionary Guard Corps vessels began transmitting radio warnings, telling every ship
01:17in the Strait that passage was not permitted, and tracking data showed traffic dropping by roughly
01:2170%. The big container lines suspended sailings the same week. Then it got worse. In the first days
01:27of March, tankers including the Skylight and the MKD-BYOM were attacked near the Strait, with crew
01:32killed, and a senior IRGC official said any ship attempting to pass would be set on fire. Tanker
01:37traffic fell to near zero, and war risk cover began to disappear. By mid-March, American intelligence
01:42reported the guards were laying naval mines from small boats, and the U.S. military said it destroyed
01:4716 mine layers. More went down in the weeks after, and the IRGC published maps steering ships onto so-called
01:53safe routes hugging the Iranian coast, because the main lanes were now seeded with explosives it could
01:57not always find again. The Panama-flagged MSC Francesca and the Liberia-flagged Epaminondas were seized
02:03outright in April, and one by one mares, Hapagloy, CMACGM, and MSC suspended transits or ordered their
02:10vessels to shelter. A waterway that normally seize about a hundred ships a day became, for most commercial
02:15operators, a place you simply do not go. If the Straits of Hormuz remain closed, it will be a
02:22global economic disaster. That is a retired four-star general describing the stakes months into the
02:27crisis, and the reason the disaster stayed theoretical is simple. Saudi Arabia had a backdoor. The kingdom
02:33pushed its crew to cross the peninsula through a pipeline built for exactly this scenario and out
02:37through the Red Sea port of Yambou, and by early summer, that corridor carried the overwhelming majority
02:41of Saudi exports. It worked. And then, three days ago, somebody decided to close that door too.
02:47Here is how fast it happened. On July 13, 2026, airstrikes hit the runway at Sana'a International
02:53Airport, and Yemen's internationally recognized government claimed responsibility, saying it
02:57targeted the runway to stop an Iranian aircraft from landing. That aircraft was reportedly carrying
03:02a Houthi delegation home from Tehran. The Houthis blamed Saudi Arabia anyway, and fired ballistic
03:07missiles and drones at a Paha International Airport in the Saudi Southwest the same day. The coalition
03:12said it intercepted the salvo, but it was the most serious direct exchange between the two sides in
03:18years, and it ended a calm that had mostly held since 2022. The following day, the language sharpened.
03:23Senior Houthi official Mohamed Al-Bukhidi said the attack gave Yemen the right to strike their airports
03:29and to impose on them a siege just as they have done to us. Six days later, they stopped threatening.
03:34There's another new development that could be rattling global markets, especially oil markets,
03:40even more. On July 20, 2026, Houthi military spokesman Yahya Saria appeared in a video address
03:46and declared a maritime embargo against Saudi Arabia, based on what he called the equation
03:51of an I for an I effective immediately. The statement claimed the right of our great people
03:55to respond to the blockade with a blockade, accused the Saudi leadership of imposing an unjust
04:00an oppressive siege on Yemen for nearly 12 years and declared complete readiness for all options,
04:05alongside a call for general mobilization. Deputy head of the group's media office,
04:08Nasruddin Amr, put the operational version on X in plainer language, saying Houthi forces were
04:13closing Bab al-Manda to Saudi enemy ships. Then the radio started up the same way they had at
04:18Hormuz five months earlier. And also there's new reporting just in today that the Houthis have begun
04:26broadcasting messages warning Saudi ships to stop traveling in the Red Sea.
04:31Yad rejected the premise. The Saudi foreign ministry condemned the allegation that the
04:35kingdom was besieging Yemen and said Saudi Arabia would take all necessary measures to protect its
04:40ships in accordance with international law. The coalition went further, calling the threat
04:45maritime piracy and announcing protection measures for commercial vessels transiting the strait.
04:49Statements are cheap, ship tracking is not, and the ships answered within a day.
04:53On July 21, the very large crude carrier Xin Longyang, which had loaded roughly 2 million
04:58barrels of Saudi crude at Yambu the previous day and was bound for China, sailed south,
05:03stopped short of the Yemeni border area, and turned north toward the Suez Canal instead.
05:07Almost simultaneously, the Liberian flagged Rotos, carrying around 700,000 barrels toward India,
05:12executed the same U-turn. A third vessel, the Suzmaks Amazon, was tracked making a similar course
05:17change. Between them, roughly 2.7 million barrels turned around in open water, without a single shot
05:23being fired. The shots came on July 22. Tankers attacked. An Iran-backed militant group claims
05:29it has just hit two Saudi oil tankers in the Red Sea. The Houthis claimed missile and drone attacks
05:35on Saudi-linked tankers, naming vessels including the Ancelia and the Layla, saying the ships had
05:40violated the blockade. Saudi officials confirmed a fire on at least one of them.
05:44The Strait of Hormuz is nowhere near the Red Sea. So this is an expansion of this war.
05:51The market did the arithmetic instantly. Brent futures had already climbed about 2% on July 21
05:57to settle near $91. By July 22 and 23, with the tanker strikes confirmed, Brent was jumping close
06:03to 4% at points and trading toward and above $100 a barrel. So the question is no longer whether
06:09the
06:09world survives losing one choke point. It has been doing that since February. The question is what
06:13happens when the escape route from the first becomes the second. To understand why that is so
06:17dangerous, you have to understand what Saudi Arabia built out there in the desert and how much of the
06:22world's oil is currently sitting inside a single plant. The escape hatch that became the target
06:29Saudi Arabia did not improvise its way out of the Hormuz crisis. It had prepared for it more than
06:3440 years ago. Running roughly 1,200 kilometers, or 746 miles, from the Abqaiq area in the eastern
06:41province all the way across the Arabian Peninsula to the Red Sea coast, the east-west crude oil pipeline,
06:46known as the Petrolene, was built in the early 1980s during the Iran-Iraq war for one explicit
06:51strategic purpose, which was to give Saudi crude a way out that did not require the Strait of Hormuz.
06:56It is a line of 48 to 56-inch pipe fed by 13 pumping stations, and for decades,
07:01it was mostly an insurance policy that nobody needed to cash. The eastern end of that system
07:07sits in the same industrial landscape that has always been the kingdom's beating heart.
07:11This is a plant in Abqaiq which used to go through 7 million barrels a day.
07:17The largest in the world. The largest in the world. That is the scale of what feeds the line,
07:20and when Hormuz went dark in late February, Aramco cashed the policy in about three weeks.
07:25Normal operating capacity before 2026 was around 5 million barrels per day.
07:31As the conflict shut down Gulf shipping, Saudi Aramco converted the parallel natural gas
07:35liquids pipelines to carry crude instead, lifting maximum throughput to 7 million barrels per day,
07:40and full capacity was reached around March 11, 2026. Of that, roughly 2 million barrels a day
07:45feed refineries on the west coast, which leaves about 5 million potentially available for export.
07:50Somebody noticed. In early April, an Iranian drone strike hit a pumping station and knocked around
07:54700,000 barrels per day off the throughput. Saudi Arabia had the line back at full capacity within
08:00days, announcing the restoration on April 12. Aramco chief executive Ammon Nasser has repeatedly
08:05described the fully-utilized petrolein as a critical supply artery, and by July the kingdom was already
08:10exploring an expansion that could add another 1 to 2 million barrels per day, along with talks about
08:15sharing the line with neighboring producers. Now look at what came out the other end.
08:19Yambu has two main crude export terminals, Yambu North and Yambu South, with a combined nominal
08:24loading capacity of roughly 4.5 to 5 million barrels per day, across multiple berths able to
08:30take very large crude carriers. In January and February 2026, Yambu was averaging somewhere between
08:36770,000 and 800,000 barrels a day, against a comparable mid-2025 figure of about 973,000. In March,
08:44loadings jumped to roughly 2.6 to 3.3 million barrels a day, with weekly peaks near 4 million.
08:50By summer, they were sustained above 4 million, with specific readings of about 4.6 million barrels
08:55a day around July 2, and 4.7 million around July 13. Read those numbers again. A port moving under
09:01a
09:01million barrels a day a year ago was, in the week before the blockade announcement, moving more than
09:05four times that, and handling the large majority of Saudi crude and condensate exports, a share
09:10frequently sited at above 70%. So much of the oil that was going through the Straits of Hormuz
09:16has now been diverted towards the Red Sea. That diversion is not a marginal adjustment. It is the
09:22entire architecture of Gulf energy exports being rerouted through one pipe and one port in a matter of
09:28weeks. The Saudis in particular have done that, reaching maximum capacity in their east-west pipeline.
09:34And here is the part that turns a clever workaround into a trap. Yambu is on the Red Sea, and
09:38the Red Sea is a
09:39bathtub with one drain at each end. North is the Suez Canal, which is fine if your customer is in
09:44Europe, and expensive nonsense if your customer is in China. South is the only sensible way to Asia,
09:49and Asia is where most Saudi crude goes. South is Bab al-Mandab. The Iranians have closed the
09:54Strait of Hormuz. The Houthis are threatening to close the equivalent on the Red Sea, known as Bab al-Mandab.
10:01The name translates roughly as the Gate of Tears, somebody's verdict on the sailing conditions long
10:06before anybody argued about oil. The Strait sits between Yemen on one side and Djibouti and Eritrea
10:11on the other, and at its narrowest, it is about 18 to 20 miles, or 29 to 32 kilometers wide.
10:16Parham Island splits it into two channels, and effectively all international shipping uses the
10:21larger western one, which funnels large tankers into designated inbound and outbound lanes, each
10:26only about two miles wide. If you are looking for a place where a few people with missiles can
10:31inconvenience the planet, that is the geography you would design. Six or seven percent sounds
10:45survivable, until you remember that it used to be less. In recent normal years, Bab al-Mandab carried
10:49something like 4 to 4.2 million barrels a day, around 5 percent of global seaborne oil trade.
10:54By June 2026, with the Saudi diversion running at full tilt, total petroleum volumes through the
10:59Strait had risen to roughly 7.4 million barrels a day, or about 7 percent of global oil out. The
11:04extra millions are not new production. They are the Hormuz barrels, wearing a different hat.
11:08And this is mostly Saudi oil that's pumped all the way across the Arabian Peninsula.
11:14Which is exactly why a retired general watching this unfold immediately zeroed in on the pipeline,
11:20rather than the ships.
11:21Saudis have created a pipeline infrastructure, as you know, from the Gulf over to the Red Sea.
11:27The infrastructure was the whole point. It was the redundancy, the plan B, the reason the first
11:31five months of this crisis were painful instead of catastrophic.
11:34So that attempt to create an alternative and some resiliency and redundancy is now going to be
11:40threatened pretty significantly.
11:42If this is the kind of breakdown you want more of, take a second to subscribe, because the next few
11:46weeks of this story are going to move fast. One more thing before we get to whether the
11:50Houthis can actually enforce any of this. For 80 years, the global economy has treated Saudi crude as a
11:55physical constant. Something that simply arrives, the way water arrives when you turn a tap.
12:00That assumption was always underwritten by geography that can be interrupted.
12:03Saudi Arabia is the jugular. It's the lifeline to the Western world's economies.
12:09Can they actually do it? And what breaks if they can?
12:12A blockade declaration is a press release until somebody enforces it. So the only question that
12:17matters now is whether a movement with no navy can meaningfully close a 20-mile strait against the
12:22combined interests of Saudi Arabia, the United States, China, India, and every insurer in London.
12:27The uncomfortable answer is that they have already done a version of it.
12:30Between late 2023 and 2025, the Houthis ran a sustained campaign against Red Sea shipping that
12:36began as a declared response to the war in Gaza and widened into a general threat to vessels linked
12:40to Israel, the United States, and the United Kingdom. According to tracking by the Armed Conflict
12:44Location and Event Data Project and other monitors, they attacked approximately 178 vessels,
12:50sinking four ships and killing at least nine sailors. They did it with one-way attack drones
12:54in the Samet and Waid families, anti-ship ballistic missiles such as the ASEF with a reported range
12:59around 400 kilometers, and anti-ship cruise missiles like the Almandib-2, often firing 10
13:04or 20 munitions in a single salvo. They boarded and seized vessels outright too, most famously the
13:09Galaxy Leader in November 2023. They never physically sealed the strait. They did not need to.
13:14Maersk, Hapagloid, MSC, CMACGM, and others slashed Red Sea transits and sent ships around the Cape of
13:19Good Hope instead. Suey's canal container tonnage fell at times by anywhere from 40 to 80% from its
13:25peaks, and freight rates, insurance premiums, and delivery times climbed together. U.S. and British
13:30airstrikes from January 2024 onward degraded the arsenal without eliminating it, and the campaign
13:35only wound down after a U.S.-brokered Gaza ceasefire took effect around October 10, 2025. That is the
13:41record the market is pricing today. And ultimately, because they've done this in the past before,
13:47that threat is credible, and that's enough to scare a lot of people off.
13:51Credibility is the weapon. The missiles are the delivery mechanism.
13:55Well, they haven't enacted, or at least they haven't enforced this blockade.
14:01Not yet, but the exit they are aiming at is the one Saudi Arabia has leaned its entire export
14:06program against for five months. But if they do, it's significant, because this was the exit
14:12that Saudi Arabia had used to avoid the Strait of Hormuz. And the volume moving through it is not
14:19a rounding error. Somewhere around the order of four million barrels a day had been exiting
14:25through this other choke point that now the Houthis want to close off. There's also a strong hint that
14:31enforcement will be selective rather than absolute, which is arguably more effective and certainly more
14:35destabilizing. Chinese-owned or crew tankers, including the Xin Longyang and the COSCO vessel
14:40COSNEW Lake, were later observed continuing or completing transits without interference,
14:45suggesting the embargo is being applied by ownership and flag rather than by cargo. Others diverted or sat
14:50still. That ambiguity is the point, and one Bloomberg economics analyst flagged the design of it immediately.
14:56The move is intended to give them wiggle room to escalate from targeting Saudi ships,
15:01only to expanding to wider disruption in the Red Sea.
15:06Wiggle room in both directions and a stated scope far broader than two tankers.
15:10So they've now come out and said that they will target all ships that go in and out,
15:15that dock in and out of Saudi ports.
15:17So what actually breaks if both gates stay shut at once? Analysts have converged on a figure of roughly
15:2225% of the world's oil and gas supply blocked by a simultaneous effective closure of Hormuz and Bab
15:28Almanda because a dual closure removes both the original Gulf exports and the only high-volume workaround
15:34at the same time. Combined losses could exceed 15 to 20 million barrels per day plus substantial LNG,
15:40larger in absolute volume than the 1973 embargo. Price projections for a sustained scenario cluster,
15:46around $150 a barrel, with prolonged cases extending toward $200 or higher. The alternatives do not close the gap.
15:53Sailing around the Cape of Good Hope adds 10 to 14 days on most routes and roughly $1 to $2
15:58million
15:59per voyage for large tankers, while tying up fleet capacity because every ship takes longer to finish
16:04every trip. The UAE's Habshin to Fujairah pipeline genuinely bypasses Hormuz, but it carries only about
16:101.5 to 1.8 million barrels a day, serves UAE production only, and the expansion that would double
16:16non-Hormuz capacity is not expected online until around 2027. Then the effects stop being about oil.
16:22China, India, Japan and South Korea take the first hit through scarce spot cargos and reduced
16:27refinery runs. Europe faces pressure on products and LNG. Roughly $10 billion a day of global trade
16:32sits at risk, food prices climb through fertilizer and diesel channels, and energy importing economies in
16:38South Asia and Sub-Saharan Africa carry the heaviest relative burden. And yet the market has not panicked,
16:43which is its own strange data point. China has almost 2 billion barrels of oil in its inventory.
16:51Enormous inventories are absorbing the shock, sapping import demand and buying time. And so that
16:57is a significant threat, not the kind of threat that the Strait of Hormuz is. That is the calmest
17:03reading available, and it comes with an expiry date. Bab al-Mandeb Strait, it accounts for around 15%
17:10of traffic, maritime traffic. The other reason nobody is claiming this gets solved with warships
17:16is that warships have never been very good at this particular problem. You can't use military force
17:22to guarantee safe passage of oil tankers. Navies can protect navies. A loaded tanker is a slow,
17:29enormous, unmissable object with no defenses of its own. Subject to a disaster if they're hit
17:35by an undersea mine or by a ballistic missile. All of it sits inside a confrontation that keeps
17:42ratcheting rather than resolving, with the same reciprocal logic invoked on every side. Iran's
17:48foreign minister framed Tehran's posture in exactly the phrase the Houthis used for the blockade.
17:53As for Iran's response, the foreign minister tonight posting,
17:56our defense doctrine is clear, eye for an eye. As of July 23, 2026, the position is this. Hormuz
18:03remains constrained by the wider Iran conflict. The Red Sea alternative is now actively threatened.
18:08Saudi Arabia has limited near-term options beyond defending the Yambu route, pursuing further pipeline
18:13expansion, or squeezing whatever volumes it can through other channels, and global markets are
18:17pricing elevated risk into every barrel. Some tankers keep sailing, others keep turning around,
18:22and the enforcement pattern changes depending on whose flag is on the stern.