Houthi Naval Blockade Threatens Saudi Arabia’s Oil Exports and Economy

The Houthi rebels in Yemen have intensified their blockade of Bab al-Mandab, the southern gateway to the Red Sea, threatening Saudi Arabia’s critical oil export routes. This development follows a shift in international focus from the Strait of Hormuz, the main entrance to the Persian Gulf, to renewed maritime restrictions imposed by Iranian-backed forces in Yemen. The blockade endangers up to 30% of global maritime trade, with Saudi Arabia’s oil exports particularly vulnerable.

Saudi Arabia, the world’s largest oil exporter, has already suffered significant production cuts due to Iranian attacks and the closure of the Strait of Hormuz. Production dropped from about 10 million barrels per day between September and February to roughly 6.6 to 7.7 million barrels per day from March to June. This disruption forced Riyadh to reroute oil exports through the Red Sea, reducing monthly oil revenues from $24.8 billion in March to approximately $18.5 billion in April.

The Bab al-Mandab strait is vital for Saudi oil shipments to four major Asian buyers: China (25.6% of Saudi oil exports in 2025), South Korea (15.8%), India (10.5%), and Japan (10.2%). In June, Saudi exports through the Red Sea port of Yanbu reached about 4.19 million barrels per day. However, recent escalations, including Saudi airstrikes on Sanaa airport and Houthi ballistic missile retaliations, have sparked a "siege against siege" dynamic, raising fears of a complete closure of Bab al-Mandab.

Dr. Yoel Guzansky of the Institute for National Security Studies (INSS) warns that Iran aims to turn Bab al-Mandab into a second Strait of Hormuz, a choke point impossible to bypass. The Saudi economy remains heavily dependent on oil, despite Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify. The oil sector grew 4.9% annually in Q4 2025, driving overall GDP growth of 4.5%. Brent crude prices hovered around $90 per barrel, near the level needed to sustain Saudi budgets.

The blockade jeopardizes Saudi Arabia’s ability to capitalize on high oil prices, threatening key projects like the $8.8 trillion Neom city development. Yemen’s Saudi-aligned government may soon intervene to counter Houthi attacks on Saudi vessels. Analysts note that the Iranian-Houthi alliance is strategically coordinated to pressure Saudi oil exports, with Tehran holding the Bab al-Mandab closure as a last-resort card amid escalating US-Iran tensions.