Strait of Hormuz crisis: Can Saudi Arabia’s Red Sea route plan ease the global oil supply shock?
Global energy markets are on the brink of a major crisis as Iran tightens its grip on the world’s most vital oil shipping route and launches daring strikes on international travel hubs.
The Strait of Hormuz, a narrow waterway carrying one-fifth of the world’s oil, has effectively been shut down by Iranian attacks and threats against commercial vessels. This blockade has sent the price of Brent crude soaring to $104 a barrel, a massive 45% increase since the conflict began two weeks ago.
The chaos escalated on Monday when an Iranian drone hit a fuel tank at Dubai International Airport, the world’s busiest for international passengers. The strike caused a major fire and forced a temporary suspension of all flights. Meanwhile, a missile hit a vehicle in Abu Dhabi, killing one person, and another drone targeted an oil facility in Fujairah. In the east, Saudi Arabia reported intercepting 35 Iranian drones aimed at its energy installations.
The Red Sea alternative
To bypass the blockade, Saudi Arabia is offering to send oil to long-term customers via its Yanbu port on the Red Sea. However, this backup route is limited. The pipeline can only carry 5 million barrels a day—far less than the 7.2 million barrels the country usually exports. Customers using Yanbu will only receive "Arab Light" grade crude and may face supply cuts.
The impact is already hitting home. China’s biggest refiner is slashing production by 10%, Japan is tapping into national reserves, and some European processors have seen their oil supplies completely cut off. Beyond energy, the fighting is driving up costs for food and fertiliser, threatening poorer nations and complicating efforts to lower consumer prices.
No end in sight
Diplomacy appears stalled. While US president Donald Trump has asked seven nations to help police the shipping lanes, allies such as Japan, Australia and Germany have hesitated, with some calling for a negotiated solution instead. Iran’s foreign minister has dismissed talk of a truce as "delusional".
On the ground, the war continues to rage. Israel has launched thousands of strikes on Tehran and Beirut, displacing 800,000 people in Lebanon. The death toll has reached 1,300 in Iran and 850 in Lebanon—including two paramedics—while 12 people in Israel and 13 US military members have also been killed.