Rabobank’s Senior Macro Strategist Bas van Geffen highlights escalating Middle East tensions, with Houthi attacks and damage to Saudi infrastructure forcing more Oil flows through the Strait of Hormuz. He notes increased supply risks via Bab el-Mandeb and potential mines, and says it has updated its energy forecasts as higher crude and refined product prices draw renewed political scrutiny.

Escalating risks reshape energy outlook

“The situation in the Middle East remains on an escalatory path, with Houthi attacks on Saudi Arabia now a regular event. Attacks have already damaged the east-west pipeline, which allowed Saudi Arabia to bypass the Strait of Hormuz.”

“The damage to the pipeline increases Iran’s leverage. It forces Saudi Arabia to pivot back to oil exports through the Strait of Hormuz.”

“Further supply risks follow from the Houthis taking key areas around the Bab el-Mandeb strait and rumours they have laid mines in the waterway, which puts new constraints on tanker movements. Following the unfolding escalation in the Middle East, we have updated our energy forecasts.”

“The energy market had already shifted higher on the news of re-escalation, and prices of crude and refined products are drawing new attention from motorists and lawmakers. Yesterday, US Senate Majority Leader Thune said he is “open to exploring” a diesel export ban if that helps ease domestic price pressures.”

“Or could these new supply chain disruptions be the catalyst for more countries to send military assets to the region?”