- Three converging threats to watch are intensifying pressure on global energy markets: damage to Russian refining capacity, ongoing disruption at Hormuz, and new, expanding Houthi threats to Red Sea shipping. The resulting physical market squeeze extends well beyond the Gulf area. Record-high diesel prices in the US and other markets, such as China's return to buying crude, raise the risk that oil markets will remain exceptionally tight into the Northern Hemisphere winter.
What we know so far is that the Russia-Ukraine war has knocked out a whole bunch of refining capacity and halted exports of critical fuels from Russia. The Gulf area has seen an escalation in fighting this week as the Hormuz chokepoint remains open with tanker transits but still limited and far from pre-war levels.
Couple this all with the chokepoint madness still being disrupted and new developments overnight: Iran-backed Houthi forces advanced toward a strategic port near the southern entrance to the Red Sea, threatening to tighten control on a second critical shipping corridor.
Bloomberg reported that Houthi rebels have gained ground around Mokha, with some geopolitical analysts reporting that the Yemeni port city has fallen.
While unconfirmed, this would mark a huge escalation of the Houthi entry into what's been creeping all summer into a regional war:
Yemen's armed forces targeted Saudi Arabia's East-West oil pipeline; satellite data shows fires at six points along the route that transports crude oil from the Persian Gulf to the Red Sea. (IRIB News)
Reports earlier in the day revealed Houthi attacks on southern areas of the kingdom, but made no mention of the Iran-aligned group targeting the further north East-West oil pipeline - which has become vital as an alternative bypass to the contested Strait of Hormuz. Earlier today: Houthis Seize Yemeni Port Of Mocha, Gaining Greater Leverage Over Bab Al Mandab Strait
And now an extremely alarming situation for global energy flows:
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