The Houthis’ latest threat to strike tankers calling at Saudi Arabian ports has opened a second major chokepoint on an already strained global energy supply chain, maritime and naval analysts said July 22 during a Middle East Institute webinar.

The Red Sea corridor carries 12%-15% of global maritime trade and about 30% of container traffic, said moderator Mirette Mabrouk of the Middle East Institute, who noted the Houthis had shifted within days from threatening Israeli-linked vessels to warning shipping companies against using Saudi ports.

The escalation comes as Saudi Arabia routes more crude through its East-West pipeline to Yanbu, lifting flows through the Suez Canal by about 30%, said retired US Navy Vice Admiral Kevin Donegan, a former director of operations at US Central Command.

“Being able to potentially stop those shipments is going to be another shock or another impact on this global energy flow,” Donegan said.

Donegan said the group could not impose a full blockade but did not need to.

“It’s a low bar for the Houthis to be successful,” he said. “They just had to wreak havoc on a ship enough to make it unsafe for commercial large shipping companies to go through there.”

The Platts September cash Dubai assessment July 22 took into consideration standing bids for cash Dubai partials at $89.40/barrel and a standing offer at $89.42/b at the end of the Platts Market on Close assessment process — up from $63.30/b July 3, before a resumption of attacks by the US and Iran lifted prices to earlier conflict levels.

Asymmetric threat
Donegan said the Houthis retained missiles, drones, mines and boarding parties, but had lost the direct Iranian support needed for higher-end guidance and control systems since the current Gulf conflict began.

Rerouting around the Cape of Good Hope adds 10 to 14 days and about $1 million per transit, Donegan said, costs that are ultimately passed to consumers.

The 2022 Saudi-Houthi ceasefire had held for roughly four years before breaking down, he added, and the group appeared to be keeping strikes below the threshold that would draw a US response, after a 52-day US campaign ended in a 2025 ceasefire.

Marwan Mahmoud El Sammak, chairman and CEO of Ship & CREW S.A.E., said the Suez route’s value extended beyond transit time, resting on decades of port and supply-chain investment that could not easily move to the Cape route.

“More than 90% of trade is seaborne,” Sammak said. “The strategic importance of Suez Canal cannot be only tied to trade.”

Sammak said the disruption’s effects were uneven. Saudi Arabia, Jordan and Sudan were most exposed, while Egypt and Turkey remained connected but faced longer, costlier routings. Western Mediterranean hubs, including Spanish and Moroccan ports, had absorbed diverted volumes, at times beyond capacity, he said.

Bab al-Mandab transit activity fell sharply July 21, with total crossings dropping to 29 vessels from 41 on July 20, a decline of nearly 30%, data from S&P Global Commodities at Sea(opens in a new tab) showed. The downturn was led by tanker traffic, which fell to seven crossings from 16 the previous day, according to CAS.

Security consultancy Vanguard TECH said July 22 that five tankers and one car carrier have been diverted from Bab al-Mandab since the Houthi announcement, as risks in the region — alongside rising insurance premiums for Strait of Hormuz transits — continued to rise.

Durable solution needed
For Egypt, Sammak said the canal generated about $3 billion in 2024-25, or roughly 3% of foreign-exchange inflows, against about $40 billion in exports, $36 billion in remittances and $11 billion in foreign direct investment.

“Egypt can sustain the pain, which is not the best solution for Egypt,” he said, adding that the country’s port investments were premised on an open canal.

Both speakers said a durable fix required broader international involvement rather than a US-led response alone.

“This shouldn’t end up being just a Saudi-Houthi issue,” Donegan said, calling for coordinated condemnation and contingency planning.
He said the episode underscored the need to reinforce the UN Convention on the Law of the Sea, which 172 nations have signed, to protect freedom of navigation across the Red Sea and the Strait of Hormuz.

“Geography and physics are the two things that you can’t really change,” Donegan said, noting LNG and bulk commodities had few alternatives to sea transport.

Source: Platts