Next Vulnerable Route for Oil Traffic: Red Sea
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Iran has escalated its control over critical global oil routes, signaling that its reach may extend beyond the Strait of Hormuz. Following US-Israeli strikes on Iranian positions, Tehran has effectively shut down Hormuz, a passage that handles a significant portion of the world’s seaborne oil. This week, Iran indicated that the Red Sea and installations supporting the USS Gerald R. Ford are now considered valid military targets. While Iran has not directly threatened commercial shipping there, its ally in Yemen, the Houthi movement, has a history of disrupting Red Sea traffic, particularly through the narrow Bab el-Mandeb strait, which typically carries about 10% of global maritime oil.
Abdul Malik al-Houthi, the movement’s leader, stated that his forces are prepared to strike “at any moment,” although they have so far remained on the sidelines. Experts suggest this caution is intentional. The Houthis, who previously caused a 70% reduction in Suez Canal traffic and forced vessels to navigate around Africa, appear to be weighing their options as part of a broader Iranian strategy. Analysts from London’s RUSI and Chatham House think tanks suggest that Iran may be reserving the Houthis for a later stage of escalation. Despite the absence of direct attacks, maritime intelligence reports show a decrease in shipping through Bab el-Mandeb, marking another disruption to global trade just as tankers were beginning to cautiously return to the Red Sea.
The closure of Hormuz has already caused unprecedented disruption to oil markets, according to the International Energy Agency. Neighboring countries are attempting to offset the impact: Saudi Arabia has increased crude flows through its Red Sea pipeline, and the United Arab Emirates has boosted shipments to the Gulf of Oman. Yet these alternate routes only carry about a quarter of the volume that normally passes through Hormuz and remain vulnerable to Iranian or Houthi interference. Naveen Das, an oil analyst at Kpler, warned that an attack on tankers in the Red Sea could trigger a significant spike in oil prices. “It signals to the market that all escape routes for oil are under threat,” Das said, noting the potential for widespread market disruption.
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