Critical Oil Chokepoint Under Houthi Control: Double Crisis at Bab al-Mandeb and Global Markets

A new twist has emerged in the Middle East war. The Iran-backed Houthis, who have controlled most of Yemen's population for more than a decade and whose slogan openly targets the United States and Israel, carried out a lightning push down Yemen's west coast last week. According to the WSJ video, they rolled into the coffee port of Mokha, seized armored vehicles and supplies from the internationally recognized government backed by Saudi Arabia and the United States, then moved toward Dhubab and the five-square-mile Perim Island sitting in the middle of the Bab al-Mandeb. With that, one of the world's busiest maritime chokepoints came under effective Houthi pressure, sparking fresh fighting and immediate implications for global oil markets and for Riyadh and Washington.

Why the strait matters: a tiny island, two channels

Bab al-Mandeb is the narrowest gap between the Arabian Peninsula and East Africa, the sole gateway from the Red Sea to the Gulf of Aden and the Indian Ocean and the shortest sea route between Europe and Asia. At peak, more than four million barrels of oil transited daily, and in the second quarter of 2026 the flow still averaged about 8.1 million barrels per day as shippers diverted from Hormuz. Perim, also called Mayyun, splits the strait into two shipping channels, so whoever holds it can monitor vessels entering and leaving the Red Sea toward the Suez Canal. Mokha and Dhubab give shore-based oversight, while the Hanish Islands reinforce it just to the north. Before the latest escalation, roughly 12 to 15 percent of global seaborne trade by volume and about 20 percent of container traffic used the Red Sea-Suez route, representing trillions of dollars in annual flows now exposed to a five-square-mile outpost.

When Hormuz choked, the Red Sea became the lifeline

After Iran sharply curbed shipments through the Strait of Hormuz at the start of the wider United States-Iran war in February, Saudi Arabia diverted crude through its East-West Pipeline to Yanbu on the Red Sea. With capacity of five to seven million barrels per day, the line became the critical workaround, carrying about three million barrels per day of Saudi crude through the Red Sea and Bab al-Mandeb in July. That workaround is now under direct threat. The Houthis announced a maritime embargo on Saudi-linked vessels and resumed strikes on tankers from Red Sea ports, while Iran-aligned fighters hit Saudi energy sites. Last Friday the East-West line was shut after drones launched from Iraq caused extensive damage. Restart timing is unclear. Saudi production already fell by 1.9 million barrels per day in August to 6.238 million, and exports dropped to 3.2 million, the lowest in 13 years and the weakest production in more than three decades.

Market and logistics reactions were immediate. Brent has traded above 100 dollars since the Houthi coastal campaign began, spiking near 110 dollars earlier last week before settling around 104.6 dollars, with West Texas Intermediate near 100 dollars. Kpler data show daily transits through Bab al-Mandeb halved from 30 to 15 in a day, while Hormuz flows fell from more than 20 million barrels per day before the war to about 10 million. War-risk insurance and freight have roughly tripled, pushing more owners to reroute around the Cape of Good Hope. A tanker from Yanbu to Taiwan takes about 19 days via Bab al-Mandeb versus 48 days via Suez, the Mediterranean, Gibraltar and around Africa. The rerouting premium feeds quickly into inflation and keeps rate expectations elevated, adding strain on a fragile global economy and on central banks watching energy-driven inflation return to the headline.

Washington-Riyadh: advisers yes, direct strikes no

Riyadh and Washington are scrambling for options. Crown Prince Mohammed bin Salman called President Trump last week to seek deeper United States involvement. Washington, wary of opening another front, has held back from direct action after a 53-day air campaign against the Houthis last year ended in a ceasefire. The current posture is advisers on the ground helping with intelligence and targeting, but no direct strikes, a position the WSJ reported Trump conveyed to the Crown Prince and echoed in his own remarks that the Houthis had signaled they did not want to fight the United States. The Saudi Air Force is striking Houthi positions while Yemeni government forces aligned with Riyadh vow to regroup. The Houthis, for their part, threaten deeper strikes inside the kingdom to pressure Riyadh to drop support for the government, leaving the export corridor and the pipeline repair race as the immediate operational bottleneck.

This is not a one-off coastal gain but a dual-chokepoint leverage play. With Iran pressing Hormuz and the Houthis pressing Bab al-Mandeb, Saudi Arabia loses a cheap, fast outlet in either direction. Shifting back to Hormuz is riskier, the SUMED pipeline through Egypt offers only 2.5 million barrels per day and is already about 80 percent used, and the Cape route is long and costly. Researchers from Oxford and Delft estimate the systemic annual risk from a Bab al-Mandeb disruption at up to 4.2 billion dollars when delays, rerouting, insurance and trade disruption are summed. The Houthi vow that Saudi oil will not pass the strait, repeated since the summer tanker campaign, effectively writes a durable risk premium into prices. Reports that China held direct talks with the Houthis in August about safe passage hint that more states may seek separate understandings, a pattern that could replicate the Hormuz bargaining logic in the Red Sea.

What to watch: pipeline, island and a trillion-dollar lane

The next weeks hinge on three markers: when the East-West Pipeline returns and at what throughput, whether the Houthis can entrench durable positions and surveillance on Perim and Dhubab, and what security guarantee would be enough for owners to return to Bab al-Mandeb. Analysts warn an extended outage could remove up to about four percent of global supply, with each additional week feeding inflation and rate paths across the broader economy. Even without a full closure, fire control from an island airstrip, coastal radars, loitering munitions and unmanned surface vessels can function like an informal toll on a trillion-dollar lane, keeping costs high despite formal assurances that navigation is uninterrupted. A durable easing would require both straits to breathe at once, not just a single ceasefire.