Houthis continue striking airports, oil facilities

The Houthis have told shipping companies, workers, and civilians to clear Saudi airports and oil facilities, saying they will keep striking both in the coming days. The group claimed responsibility for recent attacks on Aramco’s Ras Tanura refinery and Dhahran facilities and King Khalid International Airport.

The coalition intercepted a cruise missile over Al Kharj Governorate and a ballistic missile launched at Riyadh. The Houthis also said that the Saudi-led coalition carried out an airstrike on a state oil company facility in the Ras Isa port area of Hodeida, killing two people and wounding two others. Intercepting everything isn’t realistic, however, analysts tell the Independent, given the size of the Kingdom and the number of interceptors available. Former US ambassador Michael Ratney said Riyadh had assumed civilian targets such as airports were off-limits, and now has to respond without triggering a spiral.

Riyadh is seeking out wider regional support: Crown Prince Mohammed bin Salman met Iraqi Prime Minister Ali Al Zaidi, in the first visit by a foreign leader to the Saudi capital since the Houthi strikes on King Khalid International Airport, SPA reported. The visit comes after Egypt said it will back Saudi Arabia “without any reservation” as Riyadh taps regional allies, including the UAE, Turkey, Pakistan, and others.

Hormuz attacks ramp up

Attacks on ships near Hormuz are running at their fastest pace of the war, and the bill is landing on the tanker market. Gulf crude is still getting out through bypass routes and ship-to-ship transfers, but each barrel now takes more ships and more money to move. Average global supertanker earnings hit a record USD 805k a day last week.

Sunday was the worst day yet, with six vessels hit, according to the Financial Times’ count of UK Maritime Trade Operations reports. Three were refined product tankers, two were crude tankers owned by China’s New Treasure Shipping and South Korea’s Sinokor, and one was an Indian container ship, maritime security firm Vanguard says.

That puts the attack rate at nearly double the war’s previous peak. Some 24 ships were hit in the two weeks to earlier this week October, compared with 13 in the first two weeks of March, the next most intense stretch, the FT reports, citing UKMTO reports and European security sources.

October wiped out September’s recovery: Gulf oil outflows averaged 15.5 mn bbl / d in September, their highest since the war began. Only 2.9 mn barrels moved through the strait earlier this week, the lowest daily figure this month, according to Kpler data published on Tuesday. The seven-day average is running about 43% below pre-conflict levels, though Kpler says it may revise Sunday’s number upward as satellites pick up more vessels.

Ship traffic tells the same story, at about a fifth of normal: Vessels made c. 29 transits a day in the 72 hours to Sunday, against a historical average of c. 138, according to US naval data relayed by the Joint Maritime Information Center.

Some owners who sent ships through the strait for the high rates are now taking them elsewhere. At least 10 VLCCs and several Suezmax tankers have halted or reversed course near Fujairah in recent days. Some have sailed for US Gulf ports, where a global tanker shortage keeps rates high at a fraction of the risk, the FT adds.

IN PERSPECTIVE- A supertanker voyage now costs more than a rocket launch: Slow tanker transfers and longer routes mean the market needs more tankers to move the same quantity of oil. Between the detours, rising cargo volumes, and long-haul Red Sea flows, crude tanker demand is up more than 13%, Clarksons estimates.

On one US route, freight now costs almost half as much as the oil itself. One US booking was accepted at about USD 41 / bbl, roughly 45% of WTI’s price near USD 91, against an average of USD 4.50 last year. A US-to-China supertanker voyage costs about USD 80 mn, more than the USD 74 mn price of a SpaceX Falcon 9 launch.

OUR TAKE- The Hormuz squeeze is now about tanker capacity as much as crude supply. The bypass routes are doing their job, but every extra day at anchor off Oman takes another ship out of service, and the market is paying for it at record rates.