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

Sean Reid
July 27, 2018

On Wednesday, Saudi Arabia's state oil company announced that it would suspend all shipments through the Strait of Bab el-Mandeb after an attack on its tankers off the coast of Yemen.

"Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe", Saudi Arabia's Energy Minister Khalid al-Falih said in a statement.

Meanwhile, the Secretary General of the Gulf Cooperation Council (GCC) Dr. Abdullatif Bin Rashed Al-Zayani strongly denounced the Houthis' attack on two Saudi oil tankers in the Red Sea, describing the act as heinous and reflects the great threat represented by the Houthi group on the freedom of navigation and world trade in the Red Sea. The Iranian backed Houthi's have been fighting a Saudi-Arabian led coalition in a bloody civil war in Yemen for around three years, with the Saudi's exports presenting a strategic target.

The Saudi coalition intervened in Yemen's civil war in 2015 to restore the internationally recognised government of exiled president Abd-Rabbu Mansour Hadi.

Brent crude led oil prices higher, extending gains into a third day after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed United States inventories fell to a 3-1/2 year low.

In a statement carried by the Yemeni news agency, the government said the incident is a terrorist act aiming to harm the vital interests of Yemen and the freedom of global navigation. The halt will affect the flow of crude from the world's top oil exporter to markets in Europe and the United States.

The tankers pass near Yemen's shores while heading from the Middle East through the Suez Canal to Europe. It has said it foiled previous attacks there in April and May.

'The Red Sea, which was secure, is no longer secure with the American presence, ' Soleimani said.

Closing the strait, which has a shipping channel just two miles (3.2 km) wide, would force oil and liquefied natural gas (LNG) tankers around the southern tip of Africa, extending the distance for a vessel travelling between Saudi Arabia and the United States by 2,700 miles (4,300 km).

Saudi Arabia is already shipping oil and products from Yanbu port on the Red Sea to Europe via the Suez Canal.

The latest attack on Saudi oil tankers could strengthen the Arab states' position ahead of possible United Nations -sponsored peace talks between Yemen's warring parties, which aim to avoid an all-out assault on the country's main port city of Hodeidah.

"An worldwide intervention against the Huthis may be just what Saudi Arabia wants".

The alliance has called a halt to the offensive to give U.N. efforts a chance to reach a political solution that would avert an assault on the port, a lifeline for millions of Yemenis, which the United Nations fears risks triggering a starvation in the impoverished country.

Yemen´s government, in a statement Thursday carried by the state-run Saba news agency, condemned the attack on shipping and urged the worldwide community to "immediately stand with and support" the coalition in its fight against the Huthis.

Meanwhile, Arab League Secretary General Dr. Ahmed Abdulghait, too, condemned the attack on two oil tankers by the Iran-backed Houthi militias of Yemen.

At least 10,000 people have been killed and thousands others wounded in the conflict in Yemen, one of the world´s most impoverished nations.

The OPEC heavyweight, an important USA ally, has led a pact among global oil producers to boost output to cool the market after Trump imposed sanctions on Iran and criticised OPEC for high oil prices.

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