UBS: Hormuz and Red Sea Disruptions Tighten Global Oil Supply - FJElite

Brent has risen by around $28 a barrel over the past three weeks as supply disruptions intensify across two critical shipping routes. Iranian attacks have sharply reduced non-Iranian tanker traffic through the Strait of Hormuz, while the renewed US naval blockade appears to have cut Iranian loadings from 1.5-2mb/d at the start of the month to near zero. Gulf loading activity has fallen to just 2.5mb/d over the past week, compared with 6mb/d over the past month and 16.4mb/d at the start of the year, while floating storage has climbed back toward 40-50 million barrels.

Risks are also spreading to the Red Sea after the Houthis threatened a blockade of Saudi vessels and struck two ships. Saudi Arabia has relied heavily on the East-West pipeline and the port of Yanbu to bypass Hormuz, lifting exports from the port to around 4.5-5mb/d from 1.4mb/d earlier in the year. A sustained threat in the Bab el-Mandeb would weaken that workaround, forcing tankers toward the Suez Canal, adding 30-40 days to journeys and raising costs. Fully loaded VLCCs would also need to offload part of their cargo into the SUMED pipeline before crossing, further reducing efficiency.