China presses Iran to rein in Houthis as Brent crude slides toward $104

China has urged Iran to use its influence over Yemen’s Houthi forces to curb their military advances along the Red Sea coastline, a diplomatic move that came after Saudi Arabia directly appealed to Beijing for help.

Oil prices slid on the news, with Brent crude dipping toward $104 to $105 and WTI hovering around $100 to $102. The drop was compounded by reports that Saudi Arabia was offering additional crude cargoes through Oman, easing some immediate concerns about supply disruptions, along with a smaller-than-expected draw in US crude inventories.

Why China is getting involved

China accounted for over 80% of Iran’s seaborne oil exports in 2025, averaging roughly 1.4 million barrels per day. That gives Beijing enormous economic leverage over Tehran, even if Chinese officials have so far avoided explicit threats of economic coercion in their discussions.

The Houthis recently captured strategic positions along Yemen’s Red Sea coast, including the port of Mokha and Perim Island around September 10 to 11. Perim sits at the southern entrance to the Bab el-Mandeb Strait, one of the world’s most critical chokepoints for maritime trade and oil shipments.

Traffic through the Bab el-Mandeb has already cratered. On a recent day, only 21 vessels transited the strait, compared to a pre-conflict average of around 50. That’s a roughly 58% decline in daily shipping traffic through a corridor that normally handles millions of barrels of oil and billions of dollars in goods.

Iran’s response ties everything together

Tehran’s reaction has been characteristically layered. Iranian officials reportedly linked regional stability to the resolution of broader tensions involving the US and Israel, essentially conditioning any Houthi restraint on progress in Iran’s own geopolitical grievances.

The situation is further complicated by ongoing disruptions at the Strait of Hormuz, the other critical chokepoint for Middle Eastern oil exports. Vessel transits there have also dropped significantly, creating a two-front shipping crisis that threatens the security of Saudi oil exports and global energy flows more broadly.

Saudi Arabia’s decision to route additional crude through Oman is a practical workaround. If the Houthis consolidate control over key Red Sea positions, the threat to shipping becomes semi-permanent rather than episodic.

What the oil market is pricing in

Despite the Houthis holding strategically vital coastline and shipping traffic collapsing through one of the world’s busiest straits, Brent is trading around $104 to $105. Markets appear to be pricing in some combination of Saudi workarounds and the possibility that Chinese diplomatic pressure actually works.

China’s leverage over Iran is real but limited. Beijing can threaten to reduce oil purchases, but doing so would also hurt Chinese refiners who have built their operations around discounted Iranian crude.

Traders watching this situation should pay close attention to vessel transit data through both straits. If Bab el-Mandeb traffic stays depressed below 25 daily transits, it would suggest the Houthi threat is being treated as persistent rather than temporary, with potential knock-on effects for insurance rates, shipping costs, and ultimately the price at the pump.

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