Houthi Strikes on Petroline Pipeline Disrupt World's Top Oil Exports

Oil price fears are rising fast after drone strikes forced Saudi Arabia to shut its critical Petroline pipeline. The attack followed a lightning advance by Iranian-backed Houthi fighters who seized Yemen's entire Red Sea coast. They now hold three key islands and these coordinated attacks have hit Saudi Arabia hard. This nation is the world's largest crude oil exporter. Until recently, Riyadh tried to avoid Iran's threat to close the Strait of Hormuz. Instead, they piped oil 745 miles west to their Red Sea port of Yanbu. Now tankers heading south from Yanbu face danger from Houthi positions along the southern Yemen coastline. The transit through the Bab al-Mandab pinch point is particularly risky at just 16 miles wide. Houthis can attack Saudi tankers from the shoreline using short-range anti-shipping missiles or drone boats.

Houthi rebels claim navigation remains safe for all companies except Saudi vessels. They warn that if there is a coordinated attack by foreign powers, they will close Bab al-Mandab indefinitely. Even if the Petroline re-opens, Asia-bound exports would have to move north through the Suez canal into the Mediterranean first. Then ships must round the Cape of Good Hope. Experts say increased shipping costs would heap further pressure on crude prices. Crude is already above $100 a barrel. This maintains high fuel and energy costs for consumers as winter approaches. The Petroline pumped five to seven million barrels a day before the attack. That volume was about 5 per cent of global demand. It represented a quarter of the volume exported through the Strait of Hormuz prior to the Iran War.

The attack embarrassed Iraq's government which has close ties with the Saudis. Drones originated inside Iraqi territory, Baghdad pledged to investigate and sacked the military commander leading counter-militia operations in its southern Maysan province. The Saudis expressed their strongest condemnation but will not retaliate at the request of Baghdad. Meanwhile the internationally recognised Yemeni government launched a counter-offensive against Houthi positions around the Red Sea port of Mocha. Saudi Crown Prince Mohammed bin Salman has personally urged President Trump to take military action. He has declined that request so far.

Speaking on his arrival in Dublin yesterday, Mr Trump told reporters the Houthi offensive would work out just fine. He said its leaders had contacted the US to make clear the group doesn't want to fight with us. He was relaxed about the threat posed to Red Sea shipping saying only Saudi Arabia was affected and they would get that straightened out. He repeated his assertion that the Iran War would end soon, bringing oil prices down.