Oil 'Choke Points' Blocked One by One... The U.S. Backs Away

Global oil prices, which surged nearly 5% overnight, barely managed to trim their gains before closing. Yesterday (September 14, local time), November Brent crude futures rose 1.02% from the previous session to $105.68 per barrel on the London ICE Futures Exchange, while October West Texas Intermediate (WTI) crude futures rose 1.34% to $101.39 per barrel on the New York Mercantile Exchange. The surge was somewhat curbed by U.S. President Donald Trump's remark that "Iran wants a deal (with the U.S.) quickly and desperately." Yet what the world is currently witnessing is erratic U.S. maneuvering, stoking anxiety over whether Washington has effectively lost control over critical maritime "choke points" through which Middle Eastern crude flows. This is why concerns over the future direction of oil prices are escalating. Signs of weakening U.S. military power, long stationed in the Persian Gulf, are evident. The United States effectively rejected Saudi Arabia's urgent plea to halt the pro-Iran Houthi rebels attempting to seize the Bab el-Mandeb Strait in the Red Sea. Furthermore, Washington reduced air cover and escort missions for oil tankers exiting the Strait of Hormuz to just twice a day, reflecting the gravity of the situation. The U.S. is failing to contain the flames of the Middle East war as the front line spreads from Hormuz to the Arabian Peninsula and the Red Sea.
The most serious incident that occurred last week was a drone attack, believed to have been launched by pro-Iranian militias in Iraq, on a Saudi Arabian pipeline. This "East-West Pipeline," stretching 1,201 km across the Arabian Peninsula, connects to the Port of Yanbu on the Red Sea coast. Its significance surged after war erupted late this February following U.S. and Israeli strikes on Iran, which led to Iran's blockade of the Strait of Hormuz. Saudi Arabia had been bypassing the strait by exporting about 5 million barrels of crude oil per day along this route, earning it the label of the Saudi economy's "lifeline." Notably, this attack occurred just as Yemen's pro-Iran Houthi rebels swiftly seized key strategic points at the entrance to the Red Sea's Bab el-Mandeb Strait, including the Port of Mokha. The Houthi rebels are also reported to have taken control of the strait's strategic areas of Dhubab and Perim Island.

Traffic through the Bab el-Mandeb Strait route had already plummeted after Yemen's Houthi rebels declared a maritime blockade on Saudi-linked vessels and launched frequent attacks on passing ships. The alternative route is the Suez Canal connecting the Red Sea and the Mediterranean, but the canal's structure makes it difficult for fully loaded ultra-large crude carriers (ULCCs) to pass through. Consequently, Saudi tankers were even resorting to a convoluted transport route: first transporting crude oil to Egypt's Ain Sokhna terminal in the Gulf of Suez, pumping it through the Egyptian-operated SUMED pipeline to the Port of Sidi Kerir on the Mediterranean coast, and then reloading the crude onto tankers that traversed the canal once they docked at Sidi Kerir before sailing into the Mediterranean. Diverting part of the loaded crude through the pipeline to reduce ship draft for canal passage was a desperate stopgap measure.
To simplify the current situation: Iran has blocked Hormuz, the Houthis have blocked Bab el-Mandeb, and the long northern bypass route through the Suez Canal has also been disrupted by the strike on the East-West Pipeline. This is why talk of a so-called "triple blockade" becoming reality is emerging. The reduction in Saudi Arabia's oil export volume due to crude transport disruptions in the Red Sea dealt a decisive blow to the international oil market. The pillar that had kept crude futures anchored in the $80 to $90 range per barrel even after the war began has vanished. Due to the offensive in the strait by Iranian-backed Houthi rebels, Saudi Arabia's crude exports in August stood at 3.03 million barrels per day, down 33% from July. Compared to 7 million barrels prior to the U.S.-Iran war, exports have been cut in half. The Associated Press quoted a regional official as saying that it would take several weeks for the pipeline to resume operations.

Here, Iran's strategic gambit comes to the fore. While Iran is impeding crude transport through the Strait of Hormuz, it has not gained full control of the strait due to a U.S. counter-blockade. Thanks to U.S. military air cover and ship escorts for tankers attempting to transit Hormuz, around 10 vessels per day have continued to pass through recently, whereas not a single tanker or ship seeking to travel to or from Iran has reportedly made it through due to the U.S. blockade. The fact that tankers are managing to pass through Hormuz under U.S. escort is another factor that has kept global oil prices somewhat in check. Therefore, Iran appears to be pursuing a strategy of actively backing the Houthis to paralyze the Bab el-Mandeb Strait, thereby rattling global oil prices and inflation—vulnerabilities for Trump ahead of the midterm elections. While the Houthis' official stance is that they are "for now ensuring freedom of navigation," the anti-U.S. Iranian axis is virtually tightening its grip over both Hormuz and the Red Sea.
Global oil prices showed brief signs of steadying after the Iranian Foreign Ministry announced plans on September 11 for a meeting with Gulf nations, stating it "plans to discuss regional issues and exchange views on the outcomes of Iran-Oman negotiations regarding the designation of safe sea lanes for commercial vessels passing through the Strait of Hormuz." However, the meeting was eventually postponed. Bahrain reportedly declared it would not attend, citing Iranian attacks on Gulf infrastructure, and above all, Saudi Arabia also appeared reluctant to participate due to the impact of the pro-Iranian Houthi attacks on the kingdom.

Rattled by the Houthis' unexpectedly fierce offensive, Saudi Arabia turned directly to the United States for help. Reuters reported that Saudi Crown Prince Mohammed bin Salman called U.S. President Donald Trump at least twice on September 10 to request military assistance in fighting the Houthis, but the U.S. rejected the request. Given that Washington is currently concentrating its military power on the Strait of Hormuz, its position seems to be avoiding opening a new front against the Houthis. Considering that current U.S. counter-blockade operations in Hormuz are focused on maintaining a certain volume of crude tanker traffic, Washington cannot help but treat the Red Sea crisis as urgent. Consequently, observers point out that the U.S. capacity to control crude transit routes has significantly weakened.

In particular, the Financial Times reported that the U.S. military appears to have effectively scaled back its escort duties by limiting nighttime air cover for tankers transiting the Strait of Hormuz to designated two-hour windows twice a day. This not only reveals a weakened U.S. force posture in the Middle East, but also heightens concerns by signaling an increased likelihood of unilateral military action by oil-exporting nations like Saudi Arabia that can no longer rely on U.S. support. This points to the risk of the Middle East war expanding just as Iran desires, while U.S. leverage against Iran is also diminishing as Washington remains unable to commit forces to the Red Sea. Prices for Middle Eastern Dubai crude, which South Korea predominantly imports, have also surged sharply after a temporary dip. South Korea is heavily dependent on crude imports from Saudi Arabia. Last year, South Korea imported $25.7 billion worth of crude oil from Saudi Arabia, accounting for more than one-third of its total crude imports. President Lee Jae-myung explained in person that "by strengthening energy diplomacy, including dispatching special envoys for crude oil, we diversified our import sources and reduced our dependence on Middle Eastern crude from 70% to the 50% range in just a few months through measures such as subsidies for long-distance crude transport costs." He detailed measures taken to keep prices stable, including a "strategic petroleum reserve swap system," a maximum price cap on petroleum products, and export volume controls on refined oil and petroleum products, which can be viewed as the best actions the government can take under the circumstances. However, the sustained decline in import volumes stemming from weakened U.S. control over crude transport routes has reemerged as a fundamental hurdle.

The government stated that crude import volumes for September and October have largely been secured at 90% of the previous year's levels, meaning the short-term impact on domestic supply and demand will be minimal. While the government has managed the situation well so far, fallout from a prolonged crisis would be unavoidable. Within the refining industry, forecasts warn that if the "petroleum price cap," which has been in place for over six months, is lifted, gas station gasoline prices—currently hovering around 1,850 won per liter—would instantly surpass the psychological resistance level of 2,000 won. Experts also worry that because retail fuel price curbs have dulled many consumers' sensitivity to petroleum consumption, this will become an additional burden going forward. Because the price cap functions as an emergency measure that temporarily defers the burden of rising oil prices while compensating refiners post-facto through state finances, worries are mounting that the financial cost is bound to balloon if the crisis drags on.

Non-Middle Eastern alternatives such as Canadian and Australian crude are reportedly seeing soaring prices as global demand converges on them. Freight costs for shipping crude from regions outside the Middle East—where shipping lanes had been stable—are also climbing, driving up overall costs even when supplies are secured. Before the outbreak of the U.S.-Iran war, South Korea's economic outlook projections were based on an international oil price forecast of around $64 per barrel. The tipping point for the current crisis is expected to come after November. The crux of the matter is whether a compromise can be struck with Iran before the U.S. midterm elections in early November, as Trump claims. Once again, oil-importing nations are left to endure anxious moments.

※ Please note: This article was translated by AI and may contain errors.