The Houthis launched missiles and drones at ships in the southern Red Sea. Naval sources confirmed this. The attacks targeted vessels passing through the Bab el-Mandeb strait. Millions of barrels per day of Saudi crude oil exports now face disruption.
Retail traders heard "oil supply threat" and immediately bought calls on energy stocks. They did this without checking a map. The Bab el-Mandeb is twelve miles wide at its narrowest point. Twelve miles. A moderately competent captain could navigate it blindfolded while eating a sandwich.
But no. The headline said "attack" so Kevin from Nebraska liquidated his index funds and went all-in on crude futures. He doesn't know what a future is. He thinks Brent is a type of goose.
The Saudis export roughly seven million barrels per day through this strait. That number should terrify you if you understand global oil markets. It will not terrify Kevin. Kevin saw a YouTube video about technical patterns. He now believes a head-and-shoulders formation predicted this militant action in Yemen. It did not.
The naval group issued warnings. Shipping companies rerouted vessels. Insurance premiums spiked. All of this happened while you were reading articles about whether the market already priced in geopolitical risk. It did not price it in. It never prices anything in. That phrase exists to make television segments feel important.
The Houthis will keep firing missiles because they have missiles and firing them accomplishes their strategic objectives. Traders will keep pretending they understand supply chain logistics because they once drove past a port. The Red Sea will remain exactly as navigable as regional security conditions allow, which is to say barely.
Kevin's calls expire worthless on Friday.
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