Good morning, friends. We've spent weeks treating Bab Al Mandab as the threat waiting in the wings. Yesterday, it stopped waiting — the Houthis declared a blockade on Saudi Arabia, with spokesperson Yahya Saree naming the Kingdom directly and calling it an “eye for an eye” for what the group calls a Saudi siege on Yemen. The stakes are real, as a full closure could remove roughly 7% of global oil supply on top of what the war has already taken out, and with it, the one route that has kept Saudi crude reaching the market since Hormuz shut.

On a slightly more positive note from the Kingdom: Mawani just signed seven agreements worth SAR 1 bn to expand logistics centers at Jeddah Islamic Port and Al Khumrah. The Kingdom's port-based logistics footprint now stands at 34 centers — 17 in Jeddah alone — with cumulative investment past SAR 14 bn.

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UAE pushes for its own UK trade pact

The UAE isn’t stopping at May’s GCC-UK trade agreement — it wants an agreement of its own with London, Emirati ambassador to the UK Mansoor Abulhoul told Politico. Abulhoul described the GCC-UK agreement, which was finalized in May, as “a solid foundation,” adding that the two sides must “move quickly” on a comprehensive economic partnership agreement (CEPA).

In the cards: A UAE-UK CEPA would go beyond the GCC agreement, which includes removing duties on exports, facilitating business activity, and targeting sectors like financial services, digital trade, and investment protection, Abulhoul said. Possible outcomes could span increased collaboration on AI, digital trade, and financial services, more UAE investment in the UK, more tariff reduction, and mutual recognition of qualifications for skilled workers like lawyers and engineers.

In parallel, the UAE is looking to join one of the world’s biggest trade blocs, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which agreed to kick off preparatory discussions on UAE accession last month. It’s also continuing its CEPA drive, with trade from countries it has an agreement with reaching AED 304.3 bn in 1H.

Around Hormuz, by truck

A vast fleet of Iraqi trucks is hauling fuel oil through Syria to avoid Hormuz. The workaround has turned Syria, which exported none of the product a few months ago, into the Middle East’s largest fuel oil shipper — the country moved 720k tons in June, 28% of regional volumes, Bloomberg reports, citing Vortexa data. Traders estimate more than 600k tons reached Syria by road last month, each truck taking four to six days to reach Mediterranean ports including Baniyas — by our math, at least 30k truckloads.

Even at these volumes, trucks can’t match a tanker’s scale. Each truck carries about 20 tons, or 135 barrels — meaning it takes more than 2.2k of them to match a single 300k-barrel shuttle cargo, and nearly 5.2k to fill a 700k-barrel tanker offshore, by our math. Iraq’s Oil Ministry puts total June volumes even higher, with 1 mn tons trucked through Syria and Jordan, double May’s.

Why it matters: The Hormuz disruption is durably reshaping how the region moves energy. Iraq, Opec’s second-largest producer, is using the Syria route to keep fuel oil flowing, stop storage from backing up, and avoid the refinery curbs that would otherwise squeeze gasoline and diesel output. The larger question is crude: small volumes are already moving by truck, and a meaningful shift would need pipelines, with Iraq and Syria eyeing the Kirkuk-Baniyas line, shut for more than two decades.

Market watch

Oil prices slipped this morning as renewed conflict offset US-Iran diplomacy, Reuters reports. Brent crude futures decreased USD 0.78 to USD 88.44 / bbl by 04.15 GMT, while West Texas Intermediate (WTI) slipped USD 0.73 to USD 82.50 / bbl.

The Baltic Index keeps losing momentum: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was down 2.9% to 2,671 points on Monday. The capesize index dipped 5.1% to 3,889 points, while the panamax slipped 0.9% to 2,227 points. The smaller supramax inched up to 1,738 points.

Data point

82 mn tons — that’s how much cargo Alexandria Port handled in FY 2025/26, up 10% y-o-y. Dry bulk throughput led the growth, rising 19.3% to 36.5 mn tons, while containerized cargo grew 11% to 28.3 mn tons and liquid bulk edged up 1% to 10.3 mn tons, according to a Transport Ministry statement.

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