Iranian Proxies War Against the Kingdom
Increasing Iran’s influence on middle east oil supply and global oil prices, Iranian backed Houthi rebels seized the Yemeni Red Sea port of Mocha and are advancing towards the Bab al-Mandeb Strait. The Houthis could essentially close Bab al-Mandeb strait, creating a chokepoint between Yemen and the Arabian Peninsula, Djibouti and Eritrea. Mocha, the Bab al-Mandeb Strait and the Saudi East-West pipeline have allowed Saudi Arabia’s oil shipment alternatives to the Strait of Hormuz.
Likewise, Tuesday September 8th the Iranian Houthi proxies launched missiles and drones against Saudi located energy facilities, an air base and wounded 73 civilians. Wednesday the Houthis launched additional attacks on southwestern Saudia Arabia’s Khamis Mishait, affecting a Saudi air base, Abha and Jizan cities’ energy structure and a 400,000 barrel per day oil refinery.
Iranian backed Iraqi militia fired drone attacks against Saudi Arabia’s East-West pipeline, forcing Saudi Arabia to shut down their East-West pipeline. Moving 7 million barrels per day 750 miles to the Persian Gulf, the East-West pipeline allows Saudi Arabia and oil export alternative to the Strait of Hormuz.
Following a drone attack earlier this year, Saudi’s East-West pipeline was temporarily closed; but was fairly quickly repaired and flow resumed. Subject to the current degree of damage, damage may be quickly repaired and flow resumed. However, the East-West pipeline will remain vulnerable to future attacks.
The IAE (International Energy Agency) reports that Saudi Arabia’s August oil production is down to 6 million barrels per day, down 25% (2.3 million barrels per day) to 6 million barrels per day versus 2025’s average 9.4 million barrels per day.
Friday’s Brent crude prices traded at +$104 per barrel as traders attempted to determine the consequences on global oil supply when considering Yemeni rebels overtaking Mocha, advancing and potentially closing Bab al-Mandeb, plus Iraqi militia forcing Saudi’s East-West pipeline closure in the context of closure of the Strait of Hormuz, Iranian oil supply disruption and Ukraine/Russia war related oil supply disruption. All things considered and ongoing uncertainty heightens trader fears. Time will tell; but fear and uncertainty likely means unstable and higher oil prices.
