The Double Chokehold: How the Houthis Turned Saudi Arabia's Oil Escape Route Into a Second Front
The US-Iran war this week crossed a threshold markets had feared: both the Strait of Hormuz and the Red Sea's Bab el-Mandeb are now simultaneously disrupted, and the Saudi infrastructure built to bypass the first crisis is now the target of the second.
For months, energy traders, shipping insurers, and government planners operated on a shared assumption: if the Strait of Hormuz became impassable, Saudi Arabia could still move crude west. The kingdom had invested billions in pipelines and port capacity precisely to give itself — and global markets — an alternative route to the Red Sea and beyond.
That assumption died this week.
On July 20, Yemen’s Houthi movement declared a naval blockade of Saudi Arabia, announcing an “immediate maritime embargo” targeting Saudi shipping in the Bab el-Mandeb Strait at the southern mouth of the Red Sea. By July 22, Houthi forces had attacked two Saudi oil tankers in the waterway, forcing at least five vessels to reroute. On July 25, Houthi ballistic missiles targeted Aramco oil facilities in Jizan and the western port city of Yanbu — Saudi Arabia’s primary Red Sea oil export terminal — before Saudi air defenses intercepted them.
The Strait of Hormuz, where the US-Iran war has already reduced tanker crossings to a trickle, now has a twin. For the first time in modern energy history, both of the Middle East’s critical maritime chokepoints are simultaneously under threat. Oil markets responded accordingly: Brent crude broke back above $100 per barrel on July 23 for the first time in nearly two months, and WTI futures surged 12.89% over the course of the week.
How the Bypass Route Became the Target
When the US-Iran war reignited in early July, Saudi Arabia occupied an uncomfortable middle position: not a belligerent, but deeply exposed. Roughly 17 percent of the world’s seaborne oil passes through the Strait of Hormuz — and much of that belongs to Gulf producers, Saudi Arabia included.
Riyadh had prepared for this scenario. The 1.2-million-barrel-per-day East-West Pipeline, running from Abqaiq in the Eastern Province to Yanbu on the Red Sea coast, was designed specifically to give Saudi Aramco a way to export without transiting Hormuz. When Iranian forces began disrupting Hormuz traffic in early July, Saudi officials quietly accelerated Red Sea loadings. Aramco reportedly flooded the Red Sea with crude ahead of anticipated Houthi escalation.
The Houthis read that playbook. By declaring a blockade of Saudi shipping through Bab el-Mandeb — the narrow strait separating Yemen from Djibouti, through which Red Sea exports must pass to reach European and Asian buyers via the Suez Canal — they effectively extended Iran’s chokehold strategy to a second geography. A UN spokesperson described the threat plainly: “It’s obviously another chokepoint. We’re already seeing the impact of the near-closure of Hormuz.”
The attacks on Yanbu itself — Saudi Arabia’s western export terminal, the very end-point of the bypass pipeline — elevated the threat from maritime interdiction to direct infrastructure targeting.
The Market Math
The numbers this week were not normal. OilPrice.com described WTI’s trajectory precisely: “This was not a normal risk-premium rally. WTI started the week with the Strait of Hormuz already impaired, then gained speed as the market realized Saudi Arabia’s alternate export route through the Red Sea was now threatened.”
By the numbers through July 24:
- Hormuz crossings: One oil tanker on July 24 — the lowest since May 7, according to shipping data cited by OilPrice
- Brent crude: Broke $100/barrel on July 23 for the first time in nearly two months
- WTI: Up $10.54 per contract, or 12.89%, for the week ending July 24
- US national gasoline average: Back above $4.00 per gallon as of July 20 and rising
Goldman Sachs, in a note published July 21, warned that oil could surge to $120 per barrel toward the end of the year if the war extends and Hormuz remains closed. MarketWatch cited Goldman analysts projecting oil averaging $100 per barrel through 2026 even in a partial-recovery scenario.
The simultaneous disruption of both routes is “turbo-boosting” prices beyond what either crisis alone would generate, OilPrice noted, because the dual blockade eliminates the rerouting options that traders had been relying on to model a ceiling for oil prices.
Iran’s Strategic Architecture
The Houthis do not operate in isolation. The Times of Israel reported July 23 that Iran flew IRGC commanders and missile equipment to Yemen in the days before the naval blockade declaration — a direct logistics link between Tehran’s Revolutionary Guards and the Houthi campaign against Saudi shipping.
This is the “axis of resistance” doctrine translated into economic warfare. Iran does not need to close Bab el-Mandeb itself; the Houthis, operating from Yemen’s western coast, can do it with drones, anti-ship missiles, and the threat of further strikes. The geographic logic is identical to Hormuz: a narrow waterway flanked by territory Iran or its proxies influence, where a credible threat to tankers is enough to force rerouting even if every attack is intercepted.
The goal, as this week’s events suggest, is not necessarily to sink ships. It is to force insurance premiums high enough, rerouting distances long enough, and uncertainty great enough that buyers simply find other sources. That strategy has been materially effective since early July at Hormuz; the Houthis are now replicating it at Bab el-Mandeb.
The Saudi Trap
Saudi Arabia’s response has been limited and, so far, strategically constrained. After Houthi forces attacked Saudi oil tankers on July 22, Riyadh waited two days before striking back — hitting Houthi positions at Hodeidah port and Kamaran Island on July 24. Houthi spokespeople responded immediately, vowing “escalation for escalation” — and delivered on that promise within 24 hours by launching ballistic missiles at Yanbu and Jizan on July 25. Saudi air defenses intercepted the missiles using a Greek-operated system, according to Reuters.
The trap Saudi Arabia faces is structural. A full-scale counter-campaign against Houthi forces in Yemen would require a major redeployment of military assets, risk drawing the kingdom further into an open war on two fronts, and potentially invite Iranian retaliation at a moment when the US-Iran war is already destabilizing the Gulf. A former US consul warned publicly that the Saudi nuclear deal being negotiated with Washington could itself become an “escalation trap,” drawing Riyadh deeper into alignment with Washington at exactly the moment Iran’s proxies are making that alignment costly.
Trump said on July 25 that he would hold Iran directly responsible for future Houthi attacks on ships — a statement that could widen US involvement in the Yemen theater but has not yet translated into direct US strikes against Houthi territory.
Who Wins, Who Scrambles
The global supply chain is already adapting — but not uniformly.
Brazil is among the clearest winners. Asian buyers fleeing Middle East supply are bidding up Brazilian crude, accelerating an export boom from Brazil’s pre-salt offshore fields that are beyond any chokepoint threat.
Russia is the other beneficiary. Chinese refiners bought up all August crude from Russia’s Kozmino port weeks ahead of schedule, seeking to pre-position supply as Middle East risks mounted. Russian crude, which routes through the Baltic or Pacific, faces no Hormuz or Bab el-Mandeb exposure.
Pakistan is scrambling. Karachi’s refiners are seeking spot supplies from the US, Nigeria, Singapore, and Central Asia after their regular term suppliers from the Gulf became unreliable. Pakistan is also paying record prices for spot LNG after Qatar cargoes were disrupted by the effective closure of Hormuz.
OPEC+ presents a grimmer picture. The group is expected to vote for another production target increase at its August 2 meeting — but OilPrice has reported that the increased targets are largely theoretical, because the members most affected by the war (Iran, and to a degree Iraq) cannot actually deliver the barrels. A production increase on paper from producers who cannot pump is noise, not supply.
What to Watch Next Week
Several indicators will determine whether this week’s dual chokehold consolidates or breaks:
1. Hormuz tanker traffic. If crossings remain near the single-digit daily lows reported this week, the market has no Hormuz relief valve. Any uptick — from Oman’s ongoing mediation talks or diplomatic progress — would be a significant price catalyst downward.
2. Houthi follow-through on Yanbu. The July 25 missile strikes on Aramco facilities in Yanbu and Jizan were intercepted, but they signal intent. If the Houthis attempt sustained targeting of Saudi’s western export infrastructure, it would mark an escalation from maritime harassment to direct energy infrastructure warfare — a threshold that would force a US response.
3. OPEC+ meeting (August 2). Riyadh will face a decision about whether a paper production increase serves its interests in a market where its export routes are under active attack. Watch for any signal that Saudi Arabia is seeking political cover to cut rather than raise.
4. Trump’s next move on Iran. The president said on July 25 that Iran can’t have a nuclear weapon and that the US is “locked and loaded,” while simultaneously indicating Tehran is talking. Netanyahu is expected in Washington next week. Whether Trump escalates to the “largest-yet attack” he had publicly threatened, or holds back to test diplomacy, will define whether the war enters a third week of strikes or transitions to a negotiating phase.
5. Yanbu pipeline operations. Saudi officials issued “danger passed” alerts after the July 25 intercepts, but the strikes signal that the East-West Pipeline terminus is now a declared target. Any confirmed damage to Yanbu’s export infrastructure would immediately remove Saudi Arabia’s bypass capacity and push oil sharply higher.
The Houthis have accomplished something this week that Iran’s direct military action could not fully achieve through Hormuz alone: they have put Saudi Arabia in the position of defending not only its shipping lanes but its export terminals. The kingdom built Yanbu to have options. Those options are now contested. If both chokepoints remain under active threat simultaneously, the oil market’s ceiling — which Goldman already put at $120 — will be tested much sooner than analysts expected a month ago.
Analysis reflects publicly sourced reporting as of July 26, 2026. Market data cited from OilPrice, MarketWatch, Reuters, and Goldman Sachs research notes.
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