Yemen's Red Sea Ports Under Attack: Oil Storage and Energy Infrastructure Targeted

On September 29, the Israeli military launched attacks on oil storage and energy infrastructure at the Red Sea ports of Hodeidah and Ras Isa in Yemen, igniting significant fires in the area.

According to a statement from the Israeli military, the targeted infrastructure is allegedly used by the Houthi regime to transport Iranian weapons and military supplies, including oil, to the region.

Security consultancy Ambrey reported that at the time of the attacks, seven merchant vessels were present in Hodeidah and two in Ras Isa. Notably, a Panama-flagged tanker that was docked at Ras Isa during the incident is currently under investigation by the nonprofit organization United Against Nuclear Iran due to suspected involvement in Iranian trade.

These attacks follow a series of assaults on commercial shipping in the Bab al-Mandab Strait by Houthi rebels, which have severely disrupted oil supplies in the region. The escalation began after Hamas launched an attack on Israel on October 7, 2023, prompting retaliatory strikes from Israel. As a result, many shipping companies have opted to reroute their shipments around Africa, a process that is not only time-consuming but also significantly more costly.

S&P Global Commodity Insights has estimated that the supply of crude oil, condensate, and refined products through the Bab al-Mandab Strait was approximately 3.3 million barrels per day (b/d) in the first half of 2024, which is half of the average daily volume recorded in 2023.

Recent developments have heightened tensions in the Middle East, particularly following Israeli military actions in Lebanon, including the assassination of Hezbollah leader Sayyed Hassan Nasrallah on September 28.

Analysts from S&P Global Commodity Insights noted that these events are likely to create a bullish sentiment for global oil prices, with the risk of further conflict escalation remaining a significant concern, especially if Iran or the Houthis decide to retaliate. However, they also pointed out that the recent incidents have not directly impacted physical oil supply.

Yemen's oil sector has been severely affected by ongoing civil war and a lack of investment, leading to a drastic decline in crude output from 300,000-400,000 b/d in 2011 to approximately 10,000 b/d currently, all of which is refined locally. Yemen imports refined products from the UAE, Saudi Arabia, Russia, and India, with its primary crude oil pipeline extending to the Ras Isa terminal.

Data from S&P Global Commodities at Sea indicates that imports of refined products at Hodeidah and Ras Isa have reached 3.3 million barrels this year. However, tracking cargo and ships has proven challenging, as vessel operators frequently disable their automatic identification systems in the region for safety or legal reasons, according to industry sources.