The Red Sea Is Becoming Saudi Arabia's Biggest Oil Bottleneck

For years, Saudi Arabia's strategic answer to any disruption in the Strait of Hormuz has been remarkably straightforward. If volumes via the Persian Gulf were threatened, the answer was to pump west through the East-West Pipeline to Yanbu on the Red Sea.

Markets have always seen this as reassuring, while strengthening Saudi energy security and reducing dependence on Hormuz. Current developments in the Red Sea, especially Bab El Mandab, however, have exposed a critical weakness in that assumption.