Oil price exceeds US$100 after attacks in the Red Sea

The escalation of the war in the Middle East, with the closure of the Bab el-Manbed Strait by the Houthis to Saudi Arabian ships, has worsened the situation in global fuel trade, with the potential to have an impact on inflation around the world.

The increase occurs at a time when the oil market has accumulated five months of reduced supply, following the start of aggression by the United States (USA) and Israel against Iran, on February 28. Tensions led to the closure of the Strait of Hormuz, through which 20% of maritime fuel trade transited.

After the signing of the memorandum of understanding between Iran and the USA, on June 17th, the price of a barrel of oil began to fall until it reached a minimum value of US$70, on July 1st, the lowest price since the start of the war. Since then, the price of Brent has increased by 42%.

The technical director of the Institute for Strategic Studies in Petroleum, Natural Gas and Biofuels (Ineep), Ticiana Álvares, explained to Agência Brasil that the closure of the route from the Red Sea to Saudi Arabia has a “very relevant” impact.

"Saudi Arabia's alternative for transporting oil with the restrictions in the Strait of Hormuz had been via a pipeline to the Red Sea. With the closure of Bab el-Manbed, this is no longer possible", he commented.

The expert recalled that Saudi Arabia is one of the largest global oil producers and that the blockade of the Arab country should affect the supply of the product to the USA, which uses Saudi oil to make fuels, such as gasoline and diesel.

"If there was a more general closure of the Bab el-Manbed Strait, this will affect Europe in full because Asia sends its products to Europe via the Red Sea. This will greatly affect shipping prices", he concluded.

It is estimated that around 10% of maritime oil trade passes through the Bab el-Manbed Strait and the Red Sea, according to the International Energy Agency (IEA).

The director of the Institute for Higher Studies on Geopolitics, Security and Conflicts (GSEC), Rodolfo Queiroz Laterza, highlighted to Agência Brasil that Saudi Arabia is expected to have “substantial” economic losses.

“This will worsen logistical supply chains around the world and affect countless economies in several countries, especially those dependent on the import of oil and oil products”, he commented.

New stage of the warThe professor of international relations at the Pontifical Catholic University (PUC) of Minas, Danny Zahreddine, assesses that the war between Iran and the USA enters a new stage with the closure of the el-Manbed crossing by the Houthis.

“We are living in a stalemate in which, when the Americans squeeze the Iranians, they will squeeze the US and its allies even more. And, without a shadow of a doubt, the Bab el Mandeb Strait and its closure will generate an even greater shock in the distribution of oil,” he said.

The Houthis have an alliance with Iran, while Saudi Arabia is a historic ally of the US, as well as being a regional rival of Tehran.

Professor Zahreddine added that not only Saudi Arabia should be affected, but any type of transport that comes from Europe or the USA and passes through the Red Sea and Suez Canal.

"Or transport from China, Asia, Malaysia, Indonesia, Singapore to Europe or the USA. This route passing through the Portal of Tears, which is what Bab el Mandeb means, is much shorter. So, the impact is evident", he concluded.

Yemen enters the war

For historian Laterza, the war between Israel and the USA against Iran had consequences in previously “frozen” conflicts, such as the war in Yemen.

"Whose hostilities were ended in a fragile agreement in 2022 brokered by China. The Saudi air strikes on the port of Sanaa [in Yemen] days ago led to this firm response from the Houthis, who have full capacity to deny the use of the Red Sea and restrict navigation in the Bab al-Mandeb Strait", he commented.

According to a GSEC expert, the Houthis have proven military capabilities in the use of anti-ship missiles, ballistic missiles, hypersonic missiles and kamikaze drones.

“The reality is quite unfavorable for the stability of world hydrocarbon prices and the strategic impasses for the US with the military involvement of the Houthis will worsen”, concluded Laterza.

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