Hormuz Shipping Near Standstill as US–Iran Standoff Deepens, Bab el-Mandeb Also Tightens, Raising Global Energy Risk

Commercial traffic through the Strait of Hormuz has slowed to a near standstill after fresh attacks on tankers and stalled US–Iran talks, while Houthi forces tighten a declared naval blockade on Saudi-linked shipping at Bab el-Mandeb. The simultaneous squeeze on two of the world’s key maritime chokepoints is heightening risks for global oil, LNG and refined product flows, with upward pressure on freight costs, insurance premia and benchmark energy prices.

With Washington signaling its naval blockade on Iran could remain in place indefinitely and Tehran conditioning any normalization of traffic on political concessions, shipowners are reassessing transit risk. At the same time, no Saudi oil shipments were detected via Bab el-Mandeb over the weekend amid Houthi threats, underlining how the Red Sea route is increasingly constrained as an alternative corridor for Middle Eastern exports.

Introduction

Ship-tracking data over the latest weekend show only a handful of commodity vessels crossing the Strait of Hormuz, compared with more than 130 daily transits before the US–Israel war against Iran began in late February. The slowdown follows drone and missile attacks on multiple tankers operated by Abu Dhabi National Oil Company (ADNOC) and other UAE-linked vessels in or near the waterway in recent days, which Abu Dhabi has publicly blamed on Iran. 

Diplomatic efforts to end the Iran conflict and reopen Hormuz have stalled, with US negotiators exploring broader European mediation while maintaining a naval blockade around Iranian ports.  Before the conflict, roughly one-fifth of global crude and LNG seaborne trade moved through the strait.  In parallel, Yemen’s Iran-aligned Houthi movement has announced and begun enforcing a maritime embargo on Saudi shipping at the Bab el-Mandeb Strait, disrupting Red Sea flows and forcing some rerouting around the Cape of Good Hope. 

Immediate Market Impact

The sharp fall in visible Hormuz transits has reintroduced a risk premium into crude and product benchmarks, with traders reassessing supply availability from Gulf producers that traditionally rely on the strait. Attacks on UAE tankers and continued Iranian threats have led to higher war-risk insurance rates and charterers demanding risk-adjusted freight, especially for VLCC and LNG carriers. 

Bab el-Mandeb tensions add a second layer of disruption. With Houthis targeting Saudi-linked tonnage and declaring a blockade, Saudi exports that had been partially re-routed via the Red Sea to bypass Hormuz face renewed constraints, tightening effective supply in both Atlantic and Asian basins.  Freight on key Middle East–Europe and Asia–Europe routes is rising as owners price in longer Cape of Good Hope voyages and higher security surcharges. 

Supply Chain Disruptions

At Hormuz, partial closure and elevated military presence are causing delays, diversions and idle tonnage as owners wait for naval escorts or alternative instructions. AIS data suggest some vessels are transiting dark to reduce perceived targeting risk, complicating logistics planning for refiners and LNG buyers that rely on accurate arrival forecasts. 

In the Red Sea, the de facto ban on Saudi-linked traffic at Bab el-Mandeb is disrupting northbound crude and product shipments from the kingdom and potentially affecting refined product deliveries to Europe and the Mediterranean. Earlier Red Sea disruptions have already depressed Suez and Bab el-Mandeb throughput to a fraction of historical norms, with a corresponding surge in Cape traffic and longer supply chains; renewed escalation risks locking in these inefficiencies and tightening tanker availability further. 

Commodities Potentially Affected

• Crude oil: Hormuz historically handled around 20–25% of global seaborne oil exports, while a full Bab el-Mandeb closure could remove up to 7% of supply from the seaborne market. Any sustained disruption raises Brent and Dubai benchmarks and widens quality and location spreads. 
• Refined oil products (diesel, gasoline, jet fuel, fuel oil): Gulf refineries supplying Europe, Africa and parts of Asia via Red Sea routes face longer voyages and higher freight, which may lift crack spreads and spot product prices, particularly for middle distillates. 
• Liquefied natural gas (LNG): Qatar and other Gulf exporters typically move substantial LNG volumes through Hormuz; prior attacks have already curbed LNG traffic. Additional risk could tighten Atlantic-basin LNG availability and support European hub prices. 
• LPG and petrochemical feedstocks: VLGC traffic through Hormuz and Bab el-Mandeb faces higher insurance and freight, with potential knock-on effects on propane, butane and naphtha prices in Asia and Europe. 
• Containerised and dry bulk agricultural goods: While the current disruptions are energy-led, any broad rerouting away from Red Sea lanes can delay shipments of grains, sugar and edible oils between Europe, the Middle East and Asia, marginally increasing freight costs embedded in food import prices. 

Regional Trade Implications

Middle Eastern exporters that can access pipelines to alternative terminals, such as Saudi crude via Red Sea and Gulf of Aqaba ports, gain relative resilience but now face constraints at Bab el-Mandeb. Producers with Atlantic-facing capacity – the US, Brazil, West Africa and the North Sea – may benefit from improved differentials as buyers seek to diversify away from Gulf risk. 

On the import side, European and Asian buyers heavily reliant on Gulf cargoes via Suez and Hormuz must consider greater exposure to US and West African barrels and longer-haul shipments via the Cape. Asian markets may see increased competition for Atlantic cargoes, while Mediterranean refiners could face tighter crude availability and firmer premiums for regional grades.

Market Outlook

In the short term, the dual choke-point stress is likely to sustain a geopolitical risk premium across oil and gas benchmarks, with heightened intraday volatility tied to any sign of further attacks or diplomatic movement. Paper markets have at times underpriced Bab el-Mandeb risk, but physical flows now suggest a more material constraint, particularly for Saudi-linked exports. 

Traders will focus on the trajectory of US–Iran negotiations over reopening Hormuz, the durability of the Houthi blockade, and any coordinated naval protection measures that could restore confidence for commercial shipping. Inventory levels in consuming regions, especially for middle distillates and LNG, will be critical in determining how far price spikes translate into sustained strength in calendar spreads and physical premiums.

CMB Market Insight

The latest escalation at Hormuz and Bab el-Mandeb underscores the structural vulnerability of global energy and commodity trade to chokepoint disruptions. Even without a complete closure, sharply lower tanker traffic, higher insurance and elongated routes are already tightening effective supply and raising delivered costs for importers.

For commodity market participants, the strategic focus now shifts from headline price levels to route-specific and grade-specific dislocations: freight and war-risk premia, regional cracks, and basis differentials between Atlantic and Gulf-linked benchmarks. Until a credible de-escalation framework emerges, markets should plan for a prolonged period of elevated geopolitical risk and logistics-driven volatility across oil, gas and, indirectly, agricultural trade flows.