Iran Signals Bab el-Mandeb as Next Pressure Point After Hormuz Closure, Raising Global Energy and Shipping Risk

Iran’s signalling that it could use Yemen’s Houthi movement to threaten the Bab el-Mandeb Strait, on top of its existing disruption of the Strait of Hormuz, is sharpening concerns over a dual chokepoint crisis for global energy and commodity trade. The rhetoric points to higher freight and insurance costs, rerouting via the Cape of Good Hope and heightened price volatility across oil, fuels and key agricultural flows.

With Bab el-Mandeb handling Red Sea traffic between Asia, the Middle East and Europe, and Hormuz already heavily constrained, traders are now stress-testing scenarios in which two of the world’s most important maritime energy corridors are simultaneously at risk. A senior Houthi-linked official has warned that closing both straits could drive crude prices toward $200 per barrel, underscoring the market’s sensitivity to any further escalation.

Introduction

Since late February, Iran’s actions have largely blocked normal shipping through the Strait of Hormuz, a conduit that previously carried around 20% of global crude and significant LNG exports. This has already pushed Brent above $120 per barrel at the height of the crisis and forced shipowners to navigate complex war-risk assessments and sanctions exposure.

Now Tehran is signalling that Bab el-Mandeb, the narrow passage linking the Red Sea with the Gulf of Aden and critical for Saudi oil exports and global container traffic, could become the next strategic pressure point. Recent reports highlight Iranian messaging and Houthi statements that the strait could be closed if the conflict deepens, explicitly citing the possibility of oil at $200 per barrel.

Immediate Market Impact

The immediate reaction in energy markets has been a risk premium on crude and product benchmarks, with Brent and key Middle East grades supported by fears of further export disruptions and longer voyage times. Earlier phases of the Hormuz crisis already drove Brent into triple digits; any credible threat to Bab el-Mandeb raises the prospect of renewed spikes and elevated time spreads as refiners compete for prompt barrels.

On the freight side, Red Sea and Gulf of Aden passages were only just normalizing after the 2023–25 Houthi attack cycle, which had pushed many container and tanker operators around the Cape of Good Hope. Fresh threats are already encouraging owners and charterers to reassess the route, with higher war-risk premiums and potential diversions tightening tonnage supply and pushing up tanker and boxship rates.

For agricultural commodities, any further deterioration could lift delivered costs into North Africa, the Middle East and parts of Europe that rely on Black Sea, Russian, Gulf and Asian origins transiting Suez–Bab el-Mandeb. Higher bunker costs, insurance and longer transit will filter into import parity prices for grains, oilseeds, sugar and rice, even before any physical disruption to volumes.

Supply Chain Disruptions

A simultaneous squeeze at Hormuz and Bab el-Mandeb would create overlapping bottlenecks. Gulf producers shipping crude, products and potentially fertilisers to Europe would be forced to maximize pipelines and westbound routes that bypass both straits where possible, while others may have no option but to send cargoes around the Cape, adding 10–15 days to typical voyages.

Container flows carrying food ingredients, packaging materials and refrigerated products between Asia and Europe would again face delays and bunching at alternative ports, echoing the earlier Red Sea crisis. For perishable food and feed shipments, longer transit times and potential transhipment congestion raise quality risks and working-capital needs along the chain.

Regions most exposed include North Africa and the Levant, which rely heavily on imported wheat, corn, vegetable oils and sugar routed via the Red Sea and Suez, as well as Gulf states dependent on containerised food imports. European refiners and importers of Middle Eastern crude and products would also face higher costs and potential allocation constraints if pipeline and non-Suez routes cannot fully compensate.

Commodities Potentially Affected

• Crude oil & condensate: Directly exposed via Hormuz exports and Red Sea flows of Saudi, Iraqi and Russian barrels; dual chokepoint risk underpins upside price volatility.
• Refined products (diesel, gasoline, jet, fuel oil): Gulf refineries supplying Europe and Africa face longer routes and higher freight, increasing regional product cracks and delivered prices.
• LNG and LPG: Disruption at Hormuz curtails key Qatari and other Gulf LNG exports, while Red Sea threats complicate Atlantic–Pacific balancing shipments and some LPG flows.
• Grains (wheat, corn, barley): Importers in MENA and East Africa relying on Black Sea, EU and Russian origins through Suez face higher freight and insurance, widening basis versus interior origins.
• Oilseeds and vegetable oils: Palm oil from Southeast Asia and sunflower/rapeseed oil from the Black Sea into MENA and Europe would incur higher delivered costs if rerouted around Africa.
• Sugar and rice: Large flows from India, Thailand and Brazil to the Middle East and North Africa use Red Sea–Suez routes; detours raise CIF prices and could accelerate demand for nearby supplies.
• Fertilisers (urea, ammonia, phosphates): Gulf and Red Sea producers shipping to Europe and Africa face higher freight and potential delays, with knock-on effects on farm input costs.

Regional Trade Implications

Middle Eastern exporters, especially Saudi Arabia and other Gulf producers, are at the epicentre of the shock, with pipeline capacity and alternative terminals emerging as critical strategic assets. Russian and some West African crude exporters may capture incremental demand into Europe if Middle Eastern flows become less reliable or more expensive.

On the import side, North African and Levantine buyers of grains and vegetable oils may seek to diversify origins toward Black Sea ports that can use Mediterranean outlets without Red Sea exposure, or toward intra-regional suppliers. Asian buyers of Middle Eastern crude and fertilisers could tilt marginal demand toward Pacific Basin suppliers, including Australia and the Americas, if freight spreads favour non-Hormuz routes.

Logistics providers positioned on alternative corridors – such as Atlantic Basin tanker operators, South African bunkering hubs and Mediterranean ports – may see higher throughput, while ports along the Red Sea risk volume losses and congestion depending on how many shipowners choose to continue transiting Bab el-Mandeb under heightened security.

Market Outlook

In the near term, markets are likely to price in a sustained geopolitical risk premium rather than the full $200 per barrel scenario emphasised in Houthi rhetoric. Nonetheless, any confirmed attack or closure attempt at Bab el-Mandeb would probably trigger a sharp upside move in crude and product benchmarks, alongside a spike in tanker and container freight indices.

Commodity traders will monitor several indicators: actual changes in vessel routing through the Red Sea and Gulf of Aden; insurance and war-risk pricing; any renewed shipping advisories from maritime security agencies; and signals of coordinated responses from consuming nations, including possible stock releases. For agricultural markets, attention will focus on freight differentials into MENA, basis moves at key export hubs and any signs of demand rationing or policy intervention by import-dependent governments.

CMB Market Insight

The emerging Bab el-Mandeb risk, layered on an ongoing Hormuz crisis, marks a structural escalation in the weaponisation of maritime chokepoints. For energy and agricultural commodity markets, the core impact is not yet outright supply loss but a regime of structurally higher logistics costs, longer lead times and elevated tail-risk of severe disruption.

For hedgers and physical players, this argues for more conservative inventory policies near key consumption centres, active management of freight exposure and greater diversification of origins and routes where feasible. Until credible de-escalation reduces the probability of simultaneous chokepoint disruption, traders should assume a higher floor under risk premiums for crude, fuels and food commodities moving through the broader Hormuz–Red Sea–Suez corridor.