Oil holds near $81 as Houthis hit Aramco Jazan refinery again

Yemen's Houthis struck Saudi Aramco's Jazan refinery for the second time in a week, yet WTI crude held near $81 a barrel as Gulf producers rerouted cargoes around the Strait of Hormuz.

"Persian Gulf producers such as the U.A.E. and Saudi Arabia are said to be doing what they can to keep exports flowing, including switching transponders to move cargo through the Strait of Hormuz without detection," ANZ Research analysts said in a research report.

Front-month WTI crude oil futures traded 0.1% lower at $81.20 per barrel in early trade. The Houthi-affiliated Saba news agency said the group's forces fired two drones at the refinery and hit it, citing an unidentified military source. The attack caused negligible damage to a tank at the facility, according to one person familiar with the matter. Saudi authorities and Aramco did not immediately comment.

The strike, the second on the Red Sea coast facility in less than a week, comes as the Houthis' campaign against Saudi-linked shipping converges with Iran's efforts to restrict navigation through the Strait of Hormuz — the two waterways that together carry a large share of Middle Eastern energy exports. Simultaneous disruption at both chokepoints would place significant pressure on global oil markets.

The Houthis said the attack was carried out in response to what they described as Saudi violations of Yemeni airspace and sovereignty in the northern provinces of Saada and Hajjah. The group warned it would respond decisively to any further violations.

On Sunday, the group hit the refinery, setting it on fire before Saudi authorities extinguished it. No injuries were reported, the country's energy ministry said at the time. One crude storage tank was impacted in that incident, a person familiar with the event said.

The escalation marks a sharp reversal from the fragile truce that had largely held between the Houthis and Saudi Arabia since 2022. The conflict began in 2014, when the Houthis seized control of Sanaa and large parts of northern Yemen, prompting Saudi Arabia to lead a military coalition supporting the internationally recognized government.

Two chokepoints under pressure

The strategic significance extends beyond the Saudi-Yemeni border. The Houthis control large parts of northern and western Yemen near the Bab el-Mandeb Strait, the maritime gateway connecting the Red Sea with the Gulf of Aden and a critical route for global shipping. In July, the group announced a naval blockade targeting Saudi-linked shipping in the Red Sea and subsequently claimed attacks against Saudi oil tankers.

That campaign has developed in parallel with Iran's efforts to restrict navigation through the Strait of Hormuz, on the opposite side of the Arabian Peninsula. The two waterways form critical maritime gateways for Middle Eastern energy exports, meaning simultaneous disruption could place significant pressure on global oil markets and shipping networks.

For Saudi Arabia, the renewed attacks pose a particularly sensitive security challenge. Riyadh has spent years attempting to move away from the costly Yemen war while pursuing economic transformation under its Vision 2030 agenda. The escalation also comes shortly after Saudi Arabia, Türkiye and Pakistan signed a collective defense pact, adding a new strategic dimension to the security environment surrounding the kingdom.

What's at stake for oil markets

The last time the Houthis escalated attacks on Saudi energy infrastructure in 2019, strikes on Aramco's Abqaiq and Khurais facilities temporarily knocked out about 5.7 million barrels a day of production — roughly half the kingdom's output — and sent Brent crude surging nearly 15 percent in a single session. While the current attacks have caused negligible damage, the pattern of repeated strikes raises the risk premium embedded in crude prices.

For Washington, the Houthi attacks present another challenge as it confronts Iran over the Strait of Hormuz. The United States has sought to maintain freedom of navigation and protect commercial shipping, while Tehran has asserted control over the strategic waterway and demanded that vessels obtain permission before passage.

With the Houthis threatening Saudi-linked shipping from the Red Sea and Iran restricting traffic through Hormuz, the conflict is increasingly being fought through control of the maritime arteries on which the region's energy economy depends. A sustained escalation in both theaters could turn the Red Sea and Persian Gulf into interconnected fronts of the wider US-Iran confrontation, increasing risks to commercial shipping, regional energy infrastructure and the global oil supply chain.

This article is for informational purposes only and does not constitute investment advice.