Seatrade-Maritime: Houthi threat brings Bab El-Mandeb crossings down another 50%

Published by Seatrade-Maritime

The number of vessels transiting the Bab El-Mandeb Strait into and out of the Red Sea averaged 31 per day over 25-26 July, according to Clarksons Research, down 50% on the already suppressed second quarter average in tonnage terms.

The Houthi announced a blockade of Saudi Arabian shipping on 20 July and followed the threat with an attack on a tanker two days after it loaded at Saudi’s Yanbu oil export terminal in the Red Sea.

“The number of VLCCs crossing the Bab El Mandeb has declined, averaging 1 per day over the past week, down from an average of 3 per day across Q2,” said Steve Gordon, global head of Clarksons Research.

With the Houthi threat to the Red Sea, an export route that has carried greater volumes during the disruption in the Arabian Gulf, tanker rates are rising and set to soar. Clarksons put Yanbu’s exports at 3.8m barrels per day over the last week, volumes that may have to be carried around twice the usual distance should shipments to Asia need to transit the Suez Canal and go around the Cape of Good Hope.

Clarksons said VLCC earnings had risen by 13% in the last week to $145,000 per day, and VLGC spot earnings were up by 24% on-week to $172,000 per day.

While attention turned to the Red Sea, there was little improvement in the Gulf over the past week. An average of 13 transits per day over the weekend was down 90% on pre-conflict levels, while the drop was worse at more than 95% in tonnage terms, said Clarksons.

“VLCC crossings through the Strait of Hormuz remain very limited, with 6 transits reported over the past week down ~95% versus “typical” levels,” said Gordon.

The roughly 1m barrels per day of oil that has left the Gulf in recent days is a steep decline from the 10m bpd in early July, a period of relative peace following the signing of the US-Iran MoU. Pre-conflict levels were around 15m bpd.

The situation looks even worse for gas carriers, with no signs of LNG carrier or VLGC Hormuz transits in more than 10 days.

Iran has enforced the effective closure of the Strait of Hormuz through repeated attacks on ships transiting the US-administered southern route off the coast of Oman. The US is enforcing its own blockade of Iran, disabling a second tanker since the blockade was put in force after the collapse of the US-Iran MoU.

As conflict in the Middle East continues to affect economies around the world through its effect on oil markets, energy companies are looking at potential methods to avoid the chokepoints limiting regional exports.

“Longer-term planning of infrastructure investment to reduce future reliance on Hormuz continues; export capacity from bypass pipelines could rise from 8m bpd today to 17m bpd if all projects are built with these developments often involving longer shipping distances,” said Clarksons.

The Red Sea and Strait of Hormuz have been relatively quiet in recent days, although a tanker did report a splash from an unknown projectile in close proximity to the vessel in the southern Red Sea on 26 July.

On July 27, the Houthi claimed to have targeted “a number of sensitive targets and points related to the supply and transportation of crude oil from eastern Saudi Arabia to Yanbu” using drones.