Houthi attacks are expanding the Middle East conflict into the Red Sea, forcing tankers to reroute and pushing Brent above $91 amid growing fears of prolonged supply disruptions.
Aramco Floods the Red Sea With Crude Ahead of Houthi Escalation
– Perhaps foreshadowing an escalation in the Persian Gulf, Saudi Arabia's national oil company Saudi Aramco shipped record volumes of crude from its Red Sea port of Yanbu over the past four weeks.
– Yemen's Houthi rebels have sent an email to most global shipping companies, warning against loading any cargo in Saudi ports and threatening with strikes in case they come within operational reach. – Following the closure of the Strait of Hormuz, Saudi Arabia has been relying on the 7 million b/d East-West pipeline to evacuate its production from its eastern regions towards oil markets.
– Of this, only 4-4.5 million b/d due to port limitations in Yanbu, the endpoint of the East-West pipeline and a key infrastructure chokepoint, with an additional 1.5-2 million b/d shipped to Aramco refineries along the Red Sea coast.
– According to Bloomberg, Saudi Aramco surpassed Yanbu's capacity limits by loading an unprecedented 5.9 million b/d of crude in the week up to July 17, up 50% compared to the March-June average.
– Global trading giant Vitol is reportedly mulling the sale of its US shale oil Joint venture VT Energy Partners to a consortium of private equity partners Carnelian Energy and EnCap Investments for a total of $2.3 billion.
– US oil major Chevron (NYSE:CVX) has signed a Heads of Agreement with the governments of Iraq and Syria to potentially build a cross-border oil pipeline project that would evacuate Iraqi oil to the Eastern Mediterranean.
– Norway's offshore specialist Vaar Energi (OSL:VAR), majority-owned by Italy's ENI, has agreed to combine its business with regional peer BlueNord in a $1.33 billion deal, creating the largest independent producer of oil in Europe.
– Japan's top utility firm JERA, supplying the equivalent of 30% of the country's power, has launched a feasibility study for a US listing as it seeks to expand overseas and broaden its funding options.
– US shale specialist Magnolia Oil & Gas Corp (NYSE:MGY) has agreed to buy rival WildFire Energy for $4.1 billion, boosting its acreage across the Eagle Ford and Austin Chalk shale plays in Texas, raising its output by 50% to 160,000 boe/d.Tuesday, July 21, 2026
The US-Iran military escalation last week was focused on assets in the Persian Gulf, however, the entry of Houthis into the wider conflict risks triggering further supply disruptions in the Red Sea. With the first Asian-chartered tankers carrying Saudi oil now making U-turns to avoid Houthi drones and missiles, the double risk premium of disrupted Middle Eastern flows sent ICE Brent above $91 per barrel. More headaches for ship captains across Asia, as the daily bombing of ships that attempt to surreptitiously pass through the Strait of Hormuz is far from being over.
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