Yemen's Houthis Could Cause a Global Oil Shock That Rattles Markets
The Yemeni rebel group is threatening to close the Red Sea to Saudi ships.
Overview
This week has brought a fresh threat to the stock market. The Houthis, a Yemeni Shia Islamist political and military organization backed by Iran, announced a maritime blockade on Saudi Arabia in response to "an unjust and oppressive siege."
This could mean closing the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden and the wider world. With the Strait of Hormuz in the Persian Gulf essentially closed by Iran, Saudi Arabia has been using an alternative export route for its oil through the Red Sea, and that alternate route has helped mitigate the disruption to global oil supplies caused by the closure of the Strait of Hormuz.
Details
If the Houthis succeed in closing the Red Sea route to Saudi oil, it's estimated that it would reduce global oil supplies by 7% and prevent most Saudi oil exports from leaving the region.
Source
Originally published at www.fool.com.