Saudi Arabia halts oil exports via Red Sea after Yemeni retaliatory attacks

Iran-backed Houthis hit Saudi oil tanker off Yemen coast

Iran-backed Houthis hit Saudi oil tanker off Yemen coast

WTI is now trading back over 70.0 per barrel, and leaning into the bullish side heading into the latter half of the week; oil prices are receiving a boost after Saudi Arabia announced that it was halting oil shipments through the Bab al-Mandeb shipping lane in the Red Sea.

Brent crude futures had risen 66 cents, or 0.9%, to US$74.59 a barrel by 0019 GMT, after gaining 0.7% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were down 2 cents at $69.28, hovering around Wednesday's closing level. On Wednesday, prices were supported by a friendly US government report.

Saudi Arabia and the UAE's main justifications for the intervention is to protect shipping routes such as the Red Sea, which is used to bring Middle Eastern oil and Asian goods to Europe through the Suez Canal.

"The Saudi oil tanker was subjected to slight damage due to the attack by the Houthi militia", said a statement carried by Saudi state media.

"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", the minister said.

Saudi Arabia can still use its East-West mega-pipeline to ship crude from its oil fields in the Gulf into the city of Yanbu on the Red Sea, bypassing the strait and keeping the European market within regular reach.

However, experts said they do not rule out that this attack is linked, in one way or another, to recent Iranian threats to close the Strait of Hormuz, through which tankers carry 18 million barrels per day if Iranian oil exports are banned under the United States sanctions expected to be implemented on November 4.

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Shipments through the world's major oil transit route in the Red Sea have been halted by Saudi Arabia, following attacks on two oil tankers by Yemen's Houthi rebels earlier Wednesday.

The Iranian president said on Monday, during a meeting with the Iranian community in Switzerland as part of a European tour, that "oil supplies from the region can not be exported when Iran's oil supplies not exported".

"Today's attacks and Saudi announcement will also escalate tensions with Iran, which supports Houthi forces that have been increasingly threatening Saudi onshore and offshore oil assets and flows". In another event he said that Iran has many "straits" apart from the Strait of Hormuz, through which to ship its oil, in case Iran's exports are blocked.

This could lead to $200+ per barrel. That is, if the quantity supplied to the market is cut by 10%, the price of oil will increase by 250%.

"The better the recovery rate, the more oil that can be produced on the cheap", he said.

He added that OPEC has the ability to consistently produce an average 35 million bpd over a 50-year period.

The 5 million bpd Petroline could transport around 60 percent of Saudi oil exports.

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