"In the interest of the safety of ships and their crews and to avoid the risk of oil spill, Saudi Aramco has temporarily halted all oil shipments through Bab El-Mandeb with immediate effect. The company is carefully assessing the situation and will take further action as prudence demands," Saudi Aramco said in a statement.
Saudi Arabia's oil minister, Khalid Al-Falih, has confirmed that two VLCCs operated by Bahri were attacked by Houthi rebels on Wednesday morning in the Red Sea. One of the ships sustained minimal damage. No injuries or pollution were reported.
Earlier on the same the day, Houthi rebels claimed responsibility for an attack on an unnamed Saudi tanker off the contested port of Hodeidah, Yemen. The Saudi/UAE coalition backing the Yemeni government in the country's long-running civil war confirmed that the attack had resulted in slight damage to one vessel.
In April, Houthi armed militias conducted a missile attack on the VLCC ‘Abqaiq’, resulting slight damage to her bow. At the time, Minister al-Falih said that the attack would not "affect economic activity or stall oil supplies."
A Saudi oil tanker was reportedly attacked at 1.15 am local time by Iranian-backed Houthi militias in international waters, west of Hodeidah, which is controlled by the terrorist group.
"Thankfully the attack failed, due to immediate intervention of the coalition’s fleet. The tanker sustained minimal damages as a result of this terrorist attack," said Col Turki Al Malki, an official spokesman of the Coalition to Restore Legitimacy in Yemen
"This terrorist attack is a dangerous threat to the freedom of navigation and international trade in the Red Sea and Bab-El-Mandeb Strait, which might result in environmental and economic losses." he added. He said that the continuation of such attempts proves the real threat of this militia and the ones supporting it to regional and international security.
Hodeidah is the the starting point of terrorist attacks, Col Al Malki said. He said claimed that the coalition command will continue its core role to stabilise and secure Yemen and contribute to protecting and securing regional, international security and economy.
In a blog, McQuilling Services commented that a halt of flows through the Strait is sure to have significant impacts on the shipping markets as some other Middle East nations have expressed concern with Kuwait indicating a potential halt in flows, while Iraq will continue exports as normal, given it sells on a free-on-board (FOB) basis passing the transportation risk onto the buyer.
Further analysis of our remotely sensed vessel position data tells us that 40 VLCCs have completed voyages from the Arabian Gulf to Northern Europe and the Mediterranean since the beginning of 2018, while 14 additional vessels are in transit on this same route, McQuilling said.
Of these 54 ships, 17 were loaded in Saudi Arabia. In addition, 73 VLCCs stemming from the Arabian Gulf have discharged or are currently set to discharge in the Red Sea, with the a majority of these volumes likely bound for Ain Sukhna, the beginning of the Sumed pipeline, which connects the Red Sea and Mediterranean.
The disruption of Bab el-Maneb is likely to negatively impact Middle East volumes into the European market, which in our view will result a small rise in volumes sent around the Cape of Good Hope, the consultancy said.
While this may result in higher tonne/miles for specific voyages, we are reluctant to say the rise will be significant, as we project Arabian Gulf producers to focus on higher crude exports to the East, leaving European refiners to source barrels elsewhere.
Given the current narrowing of the Brent/WTI crude differential to an average $3.06 per barrel this month, which has pressured US crude volumes to the East, we see a potential for US crude to serve the European market, in place of Middle East crude.
We are certain to see volatility in the tanker freight markets for the foreseeable, as trade flows shift within the largest crude export region of the world.
Volumes to the East are likely to remain in place or potentially rise, while exports to the West will have to take the longer voyage or refiners will source from alternative regions.
Support for volatility will also stem from the supply side as internationally flagged fleets will likely be the preference for exporters in an effort to protect state-controlled tonnage, McQuilling concluded.