Ports shut, oil price up as Yemen descends into chaos

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People flee after a gunfire on a street in the southern port city of Aden. Photo: PA

IHS Maritime 360
By Stephen Spark
Friday, March 27, 2015

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Yemen sank further into chaos as Saudi Arabia led an aerial assault on Houthi rebels this morning. All the country’s ports have been closed.

In its Operation Decisive Storm, the 10-state Saudi-led coalition launched air strikes on Yemen’s Houthi-held capital, Sana’a. Reuters reported that Houthi militias were battling forces loyal to US-backed President Abd-Rabbu Mansour Hadi near the port of Aden.

The Indian Ocean ports of Aden and Al Mukalla and the Red Sea ports of Al Mukha and Al Hudaydah (Hodeida) were all reported to be closed today.

The United States Coast Guard yesterday said it was extending its 2012 entry conditions on vessels from Yemeni ports. From 8 April the restriction will also apply to ships from the port of Al Hudaydah and the Ash Shihr offshore oil terminal near Al Mukalla.

The only exception to the USCG conditions ‑ which apply to ships coming from foreign ports judged not to maintain effective anti-terrorism measures ‑ is the Balhalf LNG Terminal operated by French company Total.

As fears grew that the conflict could affect the 22nm-wide strait of Bab el-Mandeb, Egypt announced that it was sending four warships to protect the critical chokepoint at the mouth of the Red Sea. The US Department of Defense said that its warships USS Iwo Jima and USS Fort McHenry are on standby in the Red Sea.

The USA and its allies have a substantial presence in Djibouti, on the south side of the Bab al-Mandeb. In September, al-Qaeda highlighted the Bab al-Mandeb as a potential target for terrorist attack.

The complex interplay of tribal, sectarian and regional politics in Yemen to some extent resembles that on the opposite side of the Gulf of Aden, in Somalia. The country is seen as a proxy battleground for Sunni-dominated Saudi Arabia and Shia Iran, which is suspected of supporting the Houthi rebels.

Iranian foreign minister Mohammad Javad Zarif warned the Saudi-led coalition “not to go in the same direction as al-Qaeda and Daesh [Islamic State in the Levant]” as this would lead to bloodshed across the region.

Although Yemen produces only a small amount of oil itself, Saudi Arabia and the Gulf Cooperation Council states are nervous of any conflict that could affect the Gulf of Aden, through which 3.8 million barrels of oil pass daily.

The unrest in the country, which some observers fear could turn into civil war or a wider regional conflict, prompted a 5% spike in the price of Brent crude today and 1.5‑2% falls on stock exchanges across the world.

An analyst for Verisk Maplecroft quoted by Reuters this afternoon described the oil price hike as “a bit of an overreaction” but warned that the Houthi takeover had “significant geopolitical repercussions in that it adds to Iran’s growing regional clout”.

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