Why the calm? Because much of the oil flowing through the Red Sea and Suez Canal came from Russia and – so the theory went – it might be safe.The Houthis themselves signaled Russian ships had nothing to fear, and Moscow is an ally of their sponsor Iran. Oil tankers generally had been largely spared.
But Friday’s attack made one thing clear: whatever assurances Yemen’s Houthis offer, they don’t extend to a ship’s cargo if the vessel itself has even a tenuous link to the US, UK or Israel. The Houthis had said they were targeting Israeli assets because of the war in Gaza, and then extended their reach to US and UK vessels after those countries launched airstrikes in Yemen.
The attack means that a greater slice of the 3 million barrels a day of Russian crude oil and fuel that has been flowing through the Red Sea to reach customers in Asia could be at risk. And Russian volumes matter to the global market – despite sanctions imposed because of Moscow’s own war in Ukraine. With oil prices popping about $2 higher on Friday, here are some of the questions that oil traders will be considering when they return to their desks on Monday morning.
Will Red Sea Transit Stop?
This is unlikely, either for trade in general or to the flow of petroleum in particular.
The decision to transit depends mainly on four things: the willingness of the owner, that of the crew and the charterer – and profit.
Is Russian Oil a Target?
Probably not. The international maritime database Equasis lists the manager of the Marlin Luanda – the tanker that got attacked – as a firm called Oceonix Services Ltd. in London. For the Houthis, that may have been enough of a link. But fuel on the Marlin Luanda was different to a lot of Russian petroleum in one crucial way: it was being hauled using western service providers as it was priced within cap allowed by US sanctions.