Is a blockade of Bab el-Mandeb a Strait of Hormuz redux?
Iranian-backed Houthi rebels in Yemen announced a blockade of the Bab el-Mandeb Strait connecting the Red Sea and Arabian Sea.
The shutdown of the Strait of Hormuz in the Persian Gulf in March sent oil prices soaring and has become a key obstacle in negotiations to end the Iran war.
Now Iranian-backed Houthi rebels in Yemen have announced that they will similarly blockade Saudi Arabia by closing the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden and the Arabian Sea.
The move was condemned by Saudi Arabia’s foreign ministry. The leader of a coalition of countries fighting the Houthis also said they would protect coalition ships in the strait. And while countries including the United States and many of its European allies and China have military bases in Djibouti due to its strategic shipping importance, according to Al Jazeera, Houthis in Yemen have periodically threatened and launched attacks on commercial ships in Bab el-Mandeb. Most notably, the rebels launched months of attacks in 2023 in response to the Israel-Hamas War, according to Al Jazeera reporting.
What effect will that have, if the Houthis follow through on their intentions?
After the opening of the Suez Canal in 1869, the strait became a major shipping route by allowing sea trade between Asia and Europe to bypass navigation around Africa and instead traverse the Mediterranean Sea, according to Encyclopedia Britannica.
But the strait is just 18 miles wide at its narrowest point, making it a “sea route chokepoint,” according to the U.S. Energy Information Administration, the statistical and analytical division within the U.S. Department of Energy which collects, processes, analyzes, and publishes energy data.
“Hormuz is the greater stand-alone oil shock,” said Nada Sanders, distinguished professor of supply chain and information management. “Bab el-Mandeb is the broader trade and logistics shock.”
Northeastern Global News spoke to Sanders to find out more about the developing situation. Responses have been edited for length and clarity.
Why is the Bab el-Mandeb Strait important now?
The Iran War and closure of the Strait of Hormuz have only amplified Bab el-Mandeb’s importance, according to Sanders.
Saudi Arabia has a pipeline that moves oil from its eastern fields to Red Sea ports, providing an alternative to shipping through the Strait of Hormuz, she noted.
With both straits closed, “the world loses both a major source of supply and part of the transportation redundancy needed to manage that loss,” Sanders said.
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How does a closure of Bab el-Mandeb differ from a closure of Hormuz?
Sanders said a blockade of Bab el-Mandeb “would have serious global effects” but would differ from the closure of Hormuz.
Hormuz is primarily an energy-supply chokepoint – moving almost 21 million barrels of oil a day, Sanders noted.
While Bab el-Mandeb carries only about 4.2 million barrels a day, it also sees around 15% of global maritime commerce and 30% of container traffic, which includes electronics, automotive components, machinery, food, fertilizer and raw material.
Although ships normally traveling through Bab el-Mandeb could travel around Africa as an alternative, “that is an incredibly circuitous and costly journey,” Sanders said.
Previous attacks in the Red Sea added 10 days or more to many voyages, increased fuel and insurance costs for ships, and reduced effective global shipping capacity by tying up ships and containers for longer periods, Sanders said.
“The result (of this alternative route) would therefore be a broad trade and supply-chain disruption, affecting manufacturing, retail, agriculture and food security, not simply an energy shock.”
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How will markets react if both Bab el-Mandeb and the Strait of Hormuz are closed?
Sanders said that the coordinated closure of the two chokepoints would result in a “correlated global supply chain crisis,” including higher energy prices, freight costs, inflation and manufacturing delays that all are “reinforcing one another.”
Sanders said to expect higher oil prices, tanker and container freight rates, war-risk insurance premiums and shipping-company shares, as the Houthis make their threats. Oil prices have already risen about 12% since Friday, according to oil.com’s online dashboard for energy prices.
Sanders is looking to other indicators as well to see whether the disruption has moved beyond “financial-market anxiety” and into the “physical economy.”
These indicators include: persistently falling traffic through Bab el-Mandeb, diesel and jet-fuel prices separating sharply from crude prices, and manufacturers reporting delayed components or increased inventories.
Still, there is a caveat.
“One question, however, is whether the Houthis can enforce a blockade rather than merely announce one,” Sanders said.
