- Red Sea war risk premiums rose from about 0.3% to 0.75% of a vessel’s value after the Houthis announced a maritime blockade on Saudi Arabia.
- Saudi-linked ships, vessels sailing to or from Saudi Arabia and ships using Saudi Red Sea ports now face higher attack and mistaken-identity risk.
- A disruption at the Bab el-Mandeb Strait would threaten Saudi oil exports to Asia and could reduce global oil supply by up to 7%.
War risk insurance costs for ships moving through the Red Sea rose after Yemen’s Iran-aligned Houthis said they would impose a naval blockade on Saudi Arabia, according to Reuters.
Insurance market sources said the announcement raised the threat level for merchant shipping across one of the world’s most sensitive trade routes.
The move widens the risk beyond the Gulf and opens another front against the US in its war on Iran. It also adds pressure to global energy flows, especially Saudi crude exports moving through the Red Sea.
Indicative war risk premiums climbed from 0.3% to 0.75% of a vessel’s value after the Houthi announcement.
A small rate change still translates into hundreds of thousands of dollars in extra cost for a seven-day voyage.
The operational threat remains unclear. The Houthis did not explain how they would enforce a maritime blockade against Saudi Arabia, their northern neighbor along the Red Sea coast.
The announcement also left open whether the group plans to resume direct attacks on commercial vessels.
Saudi Aramco, the state oil company and the world’s largest oil exporter, has increased shipments through the Yanbu terminal on the Red Sea since the US-Israeli conflict with Iran began on February 28.
Saudi-flagged, owned or operated ships face high risk of Houthi attack. Vessels sailing to or from Saudi Arabia, along with ships using Saudi Red Sea ports, also fall into the high-risk category.
The Houthis made targeting errors during the 2024 Red Sea crisis, including attacks on ships linked through outdated company affiliations. The firm said vessels face mistaken-identity risk as a result.
A full closure of the Bab el-Mandeb Strait, the southern passage linking the Red Sea with the Gulf of Aden, would stop Saudi oil exports to Asia and reduce global oil supply by as much as 7%.
Red Sea traffic has not fully recovered since Houthi attacks off Yemen began in November 2023. The group said those attacks supported Palestinians during the Gaza war. Some attacks continued until mid-2025 and ended completely only after the Gaza ceasefire in October last year.
Shipping risks have also risen in the Gulf of Aden, where suspected Somali piracy and vessel hijackings have increased in recent months.
The Houthis said the maritime blockade on Saudi Arabia would put at risk the flow of mn of barrels exported by the kingdom through the Red Sea. The group described the move as a response to what it calls Saudi Arabia’s siege of Sana’a, Yemen’s capital.
The announcement adds another risk to Middle East oil supply. Maritime traffic through the Strait of Hormuz, which carried about one-fifth of global oil before the US-led war on Iran, remains close to a standstill as Tehran and Washington exchange attacks.
A Red Sea disruption would deepen the shock to oil trade. Saudi Arabia has used the route for the bulk of its crude exports after the war began and Iran effectively closed Hormuz.
The kingdom shifted oil flows to Yanbu after the conflict started. Exports through the Red Sea port rose to a record 4.19 mn barrels a day last month, helping limit global supply disruption. The route remains fragile, since tankers sailing there face exposure to Houthi militants who have attacked ships in the Red Sea before.
The group disrupted traffic near the Bab el-Mandeb Strait for months starting in late 2023. Shipping along the waterway almost stopped, forcing carriers to avoid the shortest route between Asia and Europe.
Tensions between Saudi Arabia and the Houthis have risen since last week, when Riyadh attacked the airport in Sana’a. The Houthis then struck a southern Saudi airport, marking the worst flare-up between the two sides since a 2022 ceasefire.
