The Strait of Hormuz remains the subject of everyone's watch and attention in five months of fighting between the United States and Iran, but what is really important for oil markets now is taking place two seas away, off the Yemeni coast. Said Arabia's escape hatch was its plan to pump crude overland to the Red Sea port of Yanbu and to ship it through the Bab el-Mandeb strait when Iran began to harass ships in the port of Hormuz. That workaround lasted for months. It's no longer, no sanitary way.

Iran-backed Houthi forces in Yemen, which have proclaimed a maritime embargo against Saudi Arabia, threatened to consider any ship loading or unloading at Saudi ports as a target.Last week, the Houthis of Yemen declared what they called a maritime embargo against Saudi Arabia, threatening to view any ship loading or unloading at Saudi ports as a target. They claimed within days to have attacked two Saudi-flagged tankers, the Encelia and the Layla, with drones and missiles. Saudi state television confirmed a fire on one of the vessels about 80 miles out to sea off Al Shuqaiq, while British maritime authorities recorded a second hit on another vessel in the same area by an unknown projectile. Windward's ship-tracking data compiled four tankers with almost 3.8 million barrels of crude, gasoil and naphtha making a U-turn before they even hit the strait. Following the announcement of the blockade, traffic across Bab el-Mandeb fell by approximately one-third in one day, and the Institute for the Study of War reported at least seven ships altering their course.

This is important as the volume of trade carried by that route of the Red Sea. Kpler figures showed the exports from Yanbu jumped to approximately 3.5 million bpd in June, from just 240,000 bpd a year earlier, representing Saudi Arabia's full reliance on relief valve. The new threat from the Houthis alone has made about 2.5 million barrels per day of Saudi exports vulnerable, according to Rystad Energy geopolitical analysis head Jorge León. When added to a Strait of Hormuz, which has been effectively closed for the bulk of the war a shipping route used by nearly 20% of all crude oil in the world it's truly a double whammy, as Lloyd's List Intelligence had summarily put it. Helima Croft of RBC Capital Markets took it one step further and theorized that a complete regional war could propel crude to its 2008 record of more than $146 a barrel.

It has not yet reached that point, but it's been a turbulent ride. Around $71 per barrel, Brent crude was trading prior to the start of the US and Israel's campaign against Iran on Feb. 28. It hit $100 early in March. It dropped to the low $70s in the middle of June during a lull, but rose back up through July as strikes resumed, $78 then $88 after Kuwait blamed Iran for hitting power plants and desalination, before rising just above $89 at the time of the Houthis' announcement of their blockade. It had jumped back up to $101 again last Thursday, the highest level since May, before retreating to $96 on Friday and about $92 over the weekend, as Washington and Tehran quietly put down hostilities for the second consecutive day. That $30 round trip in less than two weeks is a testament to how thin the market's patience has become.

Diplomatic efforts are only beginning. Iran's foreign ministry has rejected any official 10-day ceasefire, saying it is only in negotiations with Oman for the use of the Hormuz port. The compromise that was being hammered out involved Iran having to manage the transportation of vessels through the strait, but with less control as it does during the war, a "face-saving" compromise, not a true reopening, said the unnamed official. Meanwhile, Iran's oil minister has revealed that the country sold $11.5 billion worth of crude oil during the fighting and another $6.5 billion during the lulls, which resulted in Tehran reducing its inventory of approximately 100 million barrels of crude that were onsite yet another reminder that sanctions and blockades don't stop money from flowing, just make it costlier and more cloaked.

For other countries along the supply chain, it isn't a classroom discussion. India buys almost 85 per cent of its crude requirements, many of which have traditionally been supplied via the Gulf, and any $10 movement in the price of Brent has significant repercussions on the import bill and the rupee. Since the outbreak of the war, refiners have been gradually switching towards barrels from the United States, West Africa and Russia but with a cost to diversification and insurance. Premiums for war risk shipping vessels that traverse near the Bab el-Mandeb and Hormuz straits have jumped significantly, and shipping lines that reroute around the Cape of Good Hope to avoid the chokepoints are consuming additional fuel and costing a couple weeks in voyage time, costs that will be factored into freight rates and consumer prices around the world.

But what the Houthis' move reveals is that there is very little room for error. Saudi Arabia's pipeline-to-Yanbu option was intended to be a short-term solution, not the long-term replacement of Hormuz; and a rather elegant one, until someone else proved they could do the same. There may still be oil in the Gulf. So it is that each course of action has a war-risk premium, the journey is longer, and the shipping line is shaking its finger with the insurance in hand before it sets sail.