Rystad Energy warns 2.5 million bpd of Saudi oil exports at risk as Houthis threaten Red Sea naval blockade
AI-madeRystad Energy put out a blunt market warning Monday: 2.5 million barrels per day of Saudi Arabian crude exports are now directly at risk. Houthi forces are threatening a naval blockade against Saudi Arabia in the Red Sea—and this comes while the Strait of Hormuz has already ground to a near standstill. Gulf oil markets are exposed on two fronts at once.
Rystad flags 2.5 million bpd of Saudi exports as directly exposed
The exact number Rystad put in the crosshairs: 2.5 million barrels per day. That figure comes from the firm’s own vessel-tracking data, showing those Saudi crude volumes currently moving south through Bab el-Mandeb—the narrow strait at the southern end of the Red Sea.
Here’s the context. Saudi Arabia had already ramped up exports from its Yanbu terminal to around 4 million bpd as a workaround for the near-paralyzed Strait of Hormuz. That made sense — until the Houthis announced their intention to impose a naval blockade against Saudi Arabia. Rystad called it “a significant deterioration in the Middle East risk outlook.” The numbers back that up.
Oil prices slid below $88 per barrel from around $91 as traders zeroed in on Qatar’s proposed ten-day ceasefire and signs of easing restrictions at Hormuz.
Jorge Leon, Rystad’s senior vice president and head of geopolitical analysis, said it plainly: the threat is particularly significant because Saudi Arabia leaned so heavily on the Red Sea route to compensate for Hormuz. What started as a workaround has quietly become its own vulnerability.
Dual chokepoints: Hormuz near standstill, Red Sea now under threat
The Strait of Hormuz — normally one of the world’s busiest energy corridors — has been reduced to “very limited and sporadic vessel movements” by Gulf exporters, according to Leon. That’s not a slowdown. It’s close to a shutdown.
Gulf crude got rerouted through Saudi Arabia’s East-West pipeline and its Red Sea terminals, mainly Yanbu. That infrastructure has been carrying the bulk of Gulf oil to market and now functions as the system’s last major pressure valve. The Houthis are threatening to close it.
Leon was direct about what a disruption at Bab el-Mandeb would mean. It wouldn’t just hit Saudi shipments — it would eliminate one of the only remaining routes capable of compensating for severely reduced Hormuz traffic. The Houthis’ earlier campaign against commercial vessels already demonstrated both the capability and the willingness to act. The threat has precedent.
Oil prices pull back on ceasefire hopes, but analysts caution against optimism
Oil prices slid below $88 per barrel from around $91 as traders zeroed in on Qatar’s proposed ten-day ceasefire and signs of easing restrictions at Hormuz. On the surface, that looks like relief. Rystad sees it differently.
The firm cautioned that the price decline “reflects diplomatic optimism rather than any meaningful improvement in the physical supply picture.” The Strait of Hormuz is still largely closed. The Red Sea threat hasn’t gone away, and a ceasefire proposal isn’t a ceasefire.
Naeem Aslam, CIO at Zaye Capital Markets, described the market as “elevated but volatile.” Traders are trying to balance diplomatic progress against continued supply disruption risk. Profit-taking after a recent rally is understandable, he said, but it’s unfolding against a backdrop of military strikes, tanker threats, and infrastructure uncertainty. Leon’s warning was the sharpest: if a ceasefire doesn’t materialize, Hormuz stays largely closed, and Houthi threats in the Red Sea intensify, “the risk of a significant rebound in oil prices would be substantial.”
Additional pressures: U.S. policy, tariffs, and demand signals
The geopolitical picture doesn’t stop at the Red Sea. Aslam flagged President Trump’s warnings of further action against Iran — including possible strikes on energy infrastructure — as a direct source of uncertainty across the oil market. A strike affecting production facilities, export terminals, or shipping routes could push Brent back above $90 per barrel by raising freight rates, insurance costs, and replacement-supply expenses.
Trump’s additional 50 percent tariffs on selected Canadian products add another layer of friction, potentially increasing North American trade costs and corporate expenses. The exclusion of energy from those tariffs limits the immediate impact on crude flows, though broader cost pressures remain.
The U.S. Leading Economic Index declined 0.2 percent in June, missing the forecast of a 0.1 percent drop and reversing May’s modest gain. Aslam flagged it as a reason to temper demand optimism — slower business activity and industrial momentum could reduce future fuel consumption.
Background: Supply-demand outlook remains divided
The broader picture is genuinely split. Tighter U.S. crude and gasoline inventories are providing near-term price support even as economic indicators point toward softer activity ahead—two signals pulling in opposite directions, with the market caught between them.
Demand forecasts for 2026 are similarly divided. One producer group projects roughly 1.0 million bpd of growth. Another anticipates a decline of approximately 1.0 million bpd before a 2.0 million bpd rebound in 2027. That’s not a minor disagreement — it’s a fundamental split on where global consumption is headed.
Aslam summed it up cleanly: “a market caught between diplomacy-driven selling and conflict-driven supply protection.” Geopolitical risk is holding prices up for now, but a sustained move higher would require either actual supply disruption or clearer evidence that global demand is holding firm. The core picture: 2.5 million bpd of Saudi crude is exposed at Bab el-Mandeb, Hormuz remains effectively closed, ceasefire talks haven’t translated into physical relief, and the margin for error in global oil supply is narrowing fast.
Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.
