Monday, 20 August, 2018

Saudi Arabia halts oil shipments through key waterway after attack on tanker

Iran-backed Houthis hit Saudi oil tanker off Yemen coast Saudis halt oil shipments through waterway after Yemen rebel attack
Scott Davis | 27 July, 2018, 21:44

The Bab el-Mandeb strait, which connects the Gulf of Aden to the Red Sea is only about 30 kilometres wide between Yemen and Djibouti, leaving ships more vulnerable as they pass through.

Oil could be back to $45 a barrel within 12 months, Citigroup's commodities chief Ed Morse said in an interview with the Financial Post, noting that the bullish case for crude is based on a faulty analysis, OilPrice.com, an industry site, reports. "One of the VLCCs sustained minimal damage", Falih said.

"Fortunately, there were no injuries or oil spill that would have resulted in catastrophic environmental damage. Efforts are now underway to move the damaged ship to the nearest Saudi port". "If there is a major disruption European powers, Egypt and the United States would all have reason to intervene", she wrote.

How important is Bab el-Mandeb to Saudi Arabia?

Despite human rights concerns and reports of serious violations of global law by members of the Saudi-led coalition in the Arab country, South Africa and several Western countries have been supplying Saudi Arabia with advanced weapons and military equipment.

The United Arab Emirates' minister of state for foreign affairs, Anwar Gargash, said on Twitter the attack showed the need to take back the key port of Hodeida.

Attacks on shipping and Saudi, UAE naval vessels have been fairly common in the Red Sea, since the start of the war in Yemen in 2014.

"The attack is an act of terrorism that has threatened regional security and peace", he said in a statement.

"The targeted attack on the Saudi oil tankers in the Red Sea confirms the necessity to liberate Hodeida from Houthi militias", said Gargash, whose country is part of the Saudi-led coalition.

"Thankfully the attack failed due to immediate intervention of the coalition's fleet", it said without providing details.

As high oil prices and improved efficiency force refineries in the USA and Europe toward closure, the industry is shifting toward the Middle East and Asia in a move fueled by a thirst for energy among emerging economies.




A breakthrough in US-EU trade talks also lent support to oil prices.

The main impact of the incident appears to be military, Harami said.

This attack underscores the risk of an escalation in tensions in the region.

Oil prices were driven higher for the third consecutive day on Thursday, after Saudi Arabia closed a strategic shipping lane in the Red Sea following an attack on two of its large oil-tankers by Iranian backed Houthi fighters.

The Houthis have also fired missiles into Saudi Arabia.

On Thursday, Houthi leader Mohammed Ali al-Houthi claimed the group's navy had the capacity to reach the high seas and Saudi ports.

Data compiled by Reuters news agency indicates that Saudi crude exports through Bab al-Mandeb are estimated to be 500,000-700,000 bpd. The coalition has carried out a campaign of thousands of air strikes and reestricted imports into Yemen, worsening what the United Nations says is potentially the world's worst humanitarian crisis.

The UN World Food Programme said four in every 10 children under five were now acutely malnourished, and put the number of people displaced since the Hodeidah offensive began at 200,000.

Mortar bombs, armored personnel carriers, artillery, ammunition, electronic attack systems and software are also amongst a range of other controlled products supplied to Riyadh and Abu Dhabi, according to the report.

Saudi Arabia's decision to suspend its shipping through the critical passageway comes just as oil markets face increasing risk as the United States is about to sanction Iranian oil.

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