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Drone attacks shut the pipeline Saudi Arabia used to bypass Hormuz
Riyadh's overland line to the Red Sea absorbed February's Hormuz closure. With it down since Friday and the Houthis holding Mokha, Saudi crude reaching Asia is running near a fifth of June's rate, on Kpler's figures.
The Investor · Invest desk
What happened
- Saudi Arabia said on Friday it had shut the pipeline running from its major eastern oil fields to the Red Sea coast because of drone attacks originating in Iraq, where Iran supports powerful militias.
- Over two days the Houthis seized the port city of Mokha and a Red Sea island from Saudi-backed Yemeni government forces, improving their ability to block Saudi shipments through Bab el-Mandeb.
- Kpler figures show Saudi crude exports to Asia falling from about 3.4 million barrels a day in June to 128,000 in August, with a partial recovery to 700,000 this month.
- Iran effectively shut the Strait of Hormuz after the U.S. and Israeli attack on Feb. 28, bottling up Gulf oil and gas exports, and it is still disrupting the strait.
- The Saudi government did not respond to a request for comment, though an official who was not authorized to brief media said the kingdom would work with partners to ensure freedom of navigation.
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Why it matters
- constraint With the overland line to the Red Sea down and Bab el-Mandeb contested, eastern-field crude has no uncontested exit left to switch to, so any further outage subtracts volume instead of rerouting it.
- exposure Asian refiners are short roughly 2.7 million barrels a day of Saudi supply against June and have to source those barrels elsewhere, at whatever the alternative grade and voyage cost.
- decision Riyadh has to pick between escalation and negotiation while holding fewer interceptor missiles than it did in its last Yemen campaign, on ACLED's account.
- precedent The 2015 to 2022 war killed an estimated 150,000 people with little ground progress by Saudi-backed forces, and that record is the baseline any new offensive gets judged against.
The eastern fields feed a line running west across the Arabian Peninsula to the Red Sea, and that line is how Saudi Arabia kept selling after Iran's missile and drone response to the Feb. 28 U.S. and Israeli attack effectively closed the Strait of Hormuz [4][5]. From the Red Sea coast, cargoes reached Europe through Egypt's SUMED pipeline and the Suez Canal, and Asia through the Bab el-Mandeb Strait [6]. Mokha sits on the second route [2]. The Houthis declared a blockade of Saudi shipping in July and resumed large-scale attacks for the first time in four years [14].
August's shipments to Asia came to 3.8 percent of June's [1]. September is better and still thin: five and a half times August, about a fifth of June, and roughly 2.7 million barrels a day below what Asian refiners were lifting three months earlier [2][3][4].
Fortune reported that the developments have "sent jitters through global markets," but did not give a crude price or a freight rate [7]. The physical record is firmer: the overland link is shut and one of the two sea outlets is contested at the same time [1][2].
Michael Ratney, a former U.S. ambassador to Saudi Arabia, said the latest developments are "incredibly frustrating" for the kingdom [8]. "Despite their antipathy for the Iranians, this is a war they had never asked for, they had great trepidation about. And once it started, all of their ... worst-case scenarios started coming true," he said [9].
Every response Riyadh has is expensive. "Recent Houthi gains increase pressure on Riyadh to respond, but every available option carries significant costs and uncertain outcomes," said Neil Quilliam, a Middle East expert at Chatham House [10]. Sherwan Hindreen Ali, Middle East research manager at ACLED, said a bigger military push would prolong the conflict and bring heavier Houthi attacks on Saudi energy infrastructure [11]. "The kingdom already faced this in the past, but Houthi weaponry is more sophisticated now than it was back then, and the Saudis likely have less interceptor missiles available as a result of the U.S.-Iran conflict," he said [12]. Fortune reported that President Trump seems reluctant to widen an already unpopular and stalemated war ahead of congressional elections [13].
Two paths look plausible to me. The pipeline restarts within days, the Mokha seizure does not turn into sustained strikes on hulls, and August becomes a one-month outage in a series climbing back toward the 3.4 million barrels a day of June [3]. Or the line stays down while the Houthis hold ground on both sides of the strait, and something near a fifth of June's volume is the practical ceiling for as long as that lasts [3]. I lean to the second, largely because the interceptor shortage Ali describes cannot be fixed in a quarter [12]. A move back above 2 million barrels a day to Asia while the pipeline is still shut would show the sea route can carry the trade on its own.
What to watch
- Whether the east-west pipeline restarts, and whether Kpler's Asia figure moves back above 2 million barrels a day.
- Whether the Houthis turn Mokha and the seized island into sustained attacks on hulls transiting Bab el-Mandeb.
- Whether Washington supplies escorts or interceptor resupply before the congressional elections.