Saudi halts oil exports after Ansar Allah attacks

DUBAI: Saudi Arabia said on Thursday it was suspending oil shipments through a strategic Red Sea lane after Yemen’s Ansar Allah attacked two tankers in the waterway, underscoring the risk of an escalation in tensions in the region.
Brent futures rose 19 cents to $74.12 a barrel by 1305 GMT, extending their rally into a third day but slipping from a 10-day high in earlier trading.
The Ansar Allah, who have previously threatened to block the strait, said on Thursday that they had the naval capability to hit Saudi ports and other Red Sea targets.
Iran has threatened to block another strategic shipping route, the Strait of Hormuz.
Saudi Energy Minister Khalid al Falih said the Ansar Allah attacked two Saudi oil tankers in the Red Sea on Wednesday, one of which sustained minimal damage.
“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,” he said.
Saudi crude exports through Bab al Mandeb are estimated at around 500,000-700,000 barrels per day (bpd), according to analysts and Reuters data.
Most Gulf oil exports that transit the Suez Canal and SUMED Pipeline pass through the strait.
The chairman of the Kuwait Oil Tanker Company said the country was studying whether to follow suit.
The powerful commander of Iran’s Revolutionary Guards Quds force, Qassem Soleimani, criticised the US role in the Red Sea.
“The Red Sea, which was secure, is no longer secure with the American presence… (US President Donald) Trump should know that we are nation of martyrdom and that we await him,” Soleimani was quoted as saying on Thursday.
Industry and shipping sources said the suspension was unlikely to impact Saudi crude supplies to Asia, but could add shipping costs to Saudi vessels heading to Europe and the United States due to a longer transit.
Traders said the suspension order was only for Saudi-owned vessels, so state-owned Saudi Aramco could still charter foreign ships to move its crude.
Saudi Arabia also has a pipeline route to the city of Yanbu on the Red Sea keeping Europe and North America well supplied — the 5 million-bpd Petroline.
The world’s largest oil exporter has kept its crude shipments flowing during previous regional conflicts, including the 1980-1988 Iran-Iraq war when the two sides sought to disrupt each other’s oil exports in what was known as the Tanker War.
The Opec heavyweight, an important US ally, has led a pact among oil producers to boost output to cool the market after Trump imposed sanctions on Iran and criticised Opec for high prices.
Saudi state media reported shortly after Falih’s announcement that the kingdom’s Crown Prince Mohammed bin Salman chaired a meeting of the Political and Security Affairs Council but did not mention what topics were discussed.
The latest attack on Saudi oil tankers could strengthen the two Arab states’ position ahead of possible UN-sponsored peace talks between Yemen’s warring parties, which aim to avoid an all-out assault on Yemen’s main port city of Hodeida.
The Western-backed military alliance launched an offensive on June 12 to wrest Hodeida from the Ansar Allah in a bid to cut off the primary supply line of the movement, which holds the most populated areas of Yemen including the capital Sanaa.
— Reuters