US-Iran deal should see oil and LNG begin to flow again… slowly

Stay updated with the latest - Click here to follow us on Instagram Three oil tankers — two bound for India and one for China — made U-turns in the Red Sea on Tuesday while heading towards the Suez Canal after approaching the Yemeni coast at the mouth of the sea, following a warning from Yemen’s Iran-aligned Houthi militia, Reuters reported.

Their change in course points to a second potential disruption to a major global shipping route, one that could deepen the strain on energy markets already reeling from the closure of the Strait of Hormuz. The development comes a day after the Houthis declared a naval blockade against Saudi Arabia, opening a potential new front in the US-Israeli war with Iran and escalating concerns over global energy supplies and trade beyond the Gulf.

Shipping companies also received an email from the group warning them against loading or discharging cargo at Saudi Arabian ports, saying vessels engaged in such activity could be targeted. The Houthis control northern Yemen, including the coast along the Bab el-Mandeb, the strategic strait at the southern entrance to the Red Sea.

With the Strait of Hormuz — the main gateway to the Gulf — blocked during the war, Saudi Arabia’s Red Sea port of Yanbu has become the primary alternative route for Middle Eastern oil exports, handling millions of barrels of crude each day. The Xin Long Yang, a Very Large Crude Carrier (VLCC) that completed loading 2 million barrels of Saudi crude at Yanbu on Monday, was initially headed out of the Red Sea towards China before making a U-turn and sailing back towards Suez, according to shipping data.

The smaller tanker Rodos, carrying about 700,000 barrels of Saudi crude bound for India, also made a U-turn towards Suez on Tuesday. The Suezmax tanker, ‘Amazon’, which loaded crude on Tuesday for India, similarly altered course towards Suez. All three vessels switched off their transponders on Tuesday.

Dynacom Tankers Management, which manages Rodos and Amazon, and Cosco Shipping, the manager of Xin Long Yang, did not immediately respond to requests for comment. Another VLCC, New Prime, which was scheduled to arrive at Yanbu later this week to load crude, also turned back off the coast of Oman before entering the Red Sea.

Its manager, Associated Maritime Co HK, did not respond to a request for comment either. Three shipping sources said Yanbu was still operating and loading oil onto ships that were already in the Red Sea or arriving via the Suez Canal. Ship-tracking data showed that the tanker Olympic Luck, which had entered the Red Sea through Suez, was continuing towards Yanbu, along with several other vessels already nearby.

However, most tankers sailing in the Red Sea or loading at Yanbu have switched off their transponders since Tuesday.

Asian refiners have sought alternative routes for crude shipments from Saudi Arabia's Yanbu port on the Red Sea, including via the Suez Canal and around Africa's Cape of Good Hope, after Houthi forces in Yemen stated they would impose a naval blockade.

Ship-tracking data showed at least one vessel reversing course westward and reduced transits through the Strait of Hormuz in recent days. Analysts have noted that these routes could add up to four weeks of transit time and raise freight costs compared with standard paths.

On July 20, Yemen’s Houthi movement announced a naval blockade of Saudi Arabia, accusing the kingdom of exploiting Yemeni oil resources. The Saudi-led coalition stated on July 21 that it had begun protective measures for commercial vessels in the Bab el-Mandeb Strait and described the Houthi actions as piracy.

An International Crisis Group analyst assessed that disruptions to routes including the East-West pipeline and Bab el-Mandeb could raise Saudi security costs and affect global energy supplies if extended to the Strait of Hormuz.

The Houthis in Yemen have announced a blockade of Saudi Arabian shipping through Red Sea ports, including at the Bab el-Mandeb strait. The group, described as Iran-backed, stated the measure would target the top oil exporter following recent exchanges of fire.

Reports indicate this could add to existing maritime disruptions in the Strait of Hormuz linked to US-Iran confrontations.