Brent jumped to its highest level in more than a month: the market is looking for new ways to export oil

Brent and WTI crude oil prices jumped by more than 2% during trading on July 21, reaching $91.9 and $85.8, respectively—their highest closing levels since mid-June, according to Reuters. Markets are reacting to new threats from the Iran-backed Yemeni Houthis regarding the blocking of Saudi ships and ports in the Red Sea. As a result, some Asian refineries are attempting to reroute crude oil shipments from the Saudi port of Yanbu on the Red Sea through the Suez Canal and around Africa, the agency notes.

Industry insiders are already warning that if commercial vessels take the new route, their journey will take at least four weeks longer. In addition, sailing through the new corridors will lead to higher freight and fuel costs compared to the usual route—eastward from Yanbu to the Arabian Sea.

Threats from the Houthis, who on Monday announced a blockade of Saudi ships in the Red Sea and the next day demanded that all shipping companies avoid Saudi Arabian ports — pose risks to the transport of millions of barrels of Saudi oil, which have continued to flow to the market in recent months despite the U.S. and Israel’s war with Iran, notes MarketWatch. To export crude oil—during the blockade of the Strait of Hormuz—Riyadh used the port of Yanbu on the Red Sea. Now, however—following the announcement by the Houthis, who control a significant portion of Yemen, of a blockade of Saudi ships and ports— exporting oil from Saudi Arabia via the usual route—through the Bab el-Mandeb Strait off the coast of Yemen—may be hampered.

Against this backdrop—and amid reports that the U.S. and Iran have been shelling each other’s positions in the Middle East for the tenth consecutive day —Brent crude rose 2.5% on July 21, to $91.46 per barrel. WTI futures prices jumped by roughly the same amount on Tuesday and are currently trading at around $85 per barrel. At their intraday highs, Brent and WTI futures rose to nearly $92 and $86, respectively. Thus, oil prices have gained more than 20% since the beginning of July, according to MarketWatch.

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