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European Oil Markets
27JUL

Houthis fire on the Saudi tanker Encelia

2 min read
10:27UTC

Houthi forces fired missiles and drones at the Saudi tanker Encelia in the Bab al-Mandab on 22 July; Saudi state media confirmed a bow fire with the crew safe.

EconomicDeveloping
Key takeaway

A missile has replaced the radio warning in the Bab al-Mandab, opening a second contested strait south of Hormuz.

Houthi forces fired ballistic and cruise missiles and drones at the Saudi tanker Encelia in the Bab al-Mandab on 22 July, and Saudi Arabia's state news agency confirmed a fire on the vessel's bow with the crew safe and no casualties recorded 1. Yahya Saree, the Houthi military spokesman, announced the strike, calling it a response to what he termed a violation of the movement's blockade decision 2.

The Bab al-Mandab is the strait between Yemen and the Horn of Africa where the Red Sea narrows towards the Suez Canal, the southern gate for oil leaving the Gulf. It had been the quiet alternative to the Strait of Hormuz, the water Gulf barrels slipped through when the northern chokepoint tightened. Until 22 July the Houthis had closed it to Saudi shipping by radio warning alone, a broadcast rather than a weapon .

A hit in the south changes the shape of the war rather than its intensity. For a fortnight the fighting had climbed vertically, more nights and heavier targets inside Iran, while crude still slipped out through the southern route. Firing on the Encelia closes that back door, and it draws Saudi Arabia, which had wanted the maritime war held to hailing calls, into the shooting. The General Transport Authority, cited by the Saudi Press Agency, is the only official confirmation so far, and it covers the Encelia alone.

Deep Analysis

In plain English

The Houthis are an armed group that controls most of Yemen, including its Red Sea coastline. Bab al-Mandab is the narrow strait between Yemen and Djibouti that ships must pass through to reach the Suez Canal from the Gulf. On 22 July the Houthis fired missiles and drones at a Saudi oil tanker called the Encelia as it moved through that strait, and the tanker's bow caught fire. Saudi officials confirmed the Encelia's crew survived unhurt. This matters because Bab al-Mandab is one of only a few sea routes ships can use to move Gulf oil to the rest of the world. When it becomes dangerous, ships either pay much higher insurance to use it anyway or take a longer, costlier route around Africa.

Deep Analysis
Root Causes

Houthi reach into the Bab al-Mandab rests on a decade of arsenal-building that survived Saudi-led bombardment, giving a non-state force based in Sanaa the same anti-ship missile and drone capability that once belonged only to states.

The strait itself has no alternative deep-water route for eastbound Gulf traffic. The only way around it is the far longer passage round the Cape of Good Hope, which is why price, rather than distance, has become the rationing mechanism.

What could happen next?
  • Consequence

    Sustained Houthi strikes on Saudi-flagged tankers push more owners to reroute around the Cape of Good Hope, adding roughly two weeks to Asia-Europe crude and product voyages.

  • Risk

    If war-risk premiums keep rising, some smaller tanker owners may withdraw capacity from the route rather than pay for cover, tightening the deep-water fleet available just as Gulf supply is most constrained.

First Reported In

Update #160 · Houthis hit Saudi tankers; Brent tops $100

Al Jazeera· 23 Jul 2026
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Different Perspectives
Asian buyers (India, Japan, China, South Korea)
Asian buyers (India, Japan, China, South Korea)
Asian refiners are absorbing 62% of Yanbu's 3.75m b/d flow, the bulk of Saudi Arabia's rerouted crude now clearing east rather than into the Atlantic basin. That destination split leaves Asian buyers more exposed to any single Yanbu-specific disruption than under the kingdom's normal multi-terminal export pattern.
Russia / Lukoil
Russia / Lukoil
Moscow loses the roughly $14-a-barrel legal headroom the frozen price-cap formula would otherwise have released toward $58, even as Urals trades below Russia's own $59 budget floor. The shadow-fleet insurance workaround the freeze leaves untouched remains the actual route sanctioned crude clears above $44 in practice.
European Union / Council
European Union / Council
Brussels adopted its 21st sanctions package on 23 July, letting boarding states confiscate and sell shadow-fleet cargo outright and freezing the G7 price cap's automatic adjustment to mid-2027, converting indefinite tanker storage into recoverable value for enforcers.
Freight and tanker desks
Freight and tanker desks
The Baltic Exchange's TD3C VLCC benchmark, most desks' reference for Gulf freight, prices a single-vessel voyage while Saudi shippers now pay for two Suezmax charters at roughly double the transit time. That gap leaves any book hedged purely on TD3C carrying unrecognised Suezmax basis risk on the bulk of Saudi rerouted volume.
Mediterranean refiners (Sines, Trieste, Augusta)
Mediterranean refiners (Sines, Trieste, Augusta)
Refiners already facing aframax rates up 198% month-on-month now watch Ain Sokhna draw 23% of Yanbu's rerouted crude through the same SUMED corridor they lean on for product backfill. Fujairah and ARA stocks near record lows leave little room to absorb a thinner Suez product flow.
Saudi Arabia
Saudi Arabia
Riyadh has rerouted its entire western-coast crude book through Yanbu and Suez since the 23 July Bab el-Mandeb embargo, absorbing a roughly $2m-per-voyage Suezmax premium on every diverted cargo. The kingdom's fiscal breakeven near $108 a barrel makes that freight cost, not the blockade itself, the more durable drag on export economics.