DATA & FIGURES
The blockade could disrupt oil shipments equivalent to about 7% of global supply. Brent crude briefly traded above $90 per barrel after the blockade announcement before retreating to around $88.04 per barrel. West Texas Intermediate slipped to about $82.29 per barrel. The number of ship-to-ship oil transfers outside Hormuz has decreased, with only 2-3 transfers occurring in recent days, down from 3 a week earlier. Supertanker crossings through Hormuz have also decreased, averaging only 2 per day last week, down from 8 per day in late June and early July.
THE SCENARIO
The Red Sea crisis has been escalating due to the U.S.-Iran war, with the Houthis, who are aligned with Iran, declaring a naval blockade on Saudi Arabia. This move has significant implications for global oil supplies, as it threatens to disrupt oil shipments through the Red Sea. The crisis has already led to a reduction in tanker traffic through Hormuz, and the blockade could further exacerbate the situation.
DIRECT QUOTE
"The maritime embargo was retaliation for what it described as a Saudi siege of Yemen." — Charles Kennedy, Writer for Oilprice.com
BBN INSIGHT
The Positive Side: The blockade could lead to increased investment in alternative energy sources, such as solar and wind power, as countries seek to reduce their dependence on oil. The Negative Side: The disruption to oil supplies could lead to increased prices, reduced availability of oil, and significant economic impacts on countries that rely heavily on oil imports. The blockade also poses a significant threat to global economic stability, particularly for countries that rely on oil exports, such as Saudi Arabia.
MARKET REACTION
Brent crude briefly traded above $90 per barrel after the blockade announcement before retreating to around $88.04 per barrel. West Texas Intermediate slipped to about $82.29 per barrel.