Middle East shipping bottleneck persists as Iran, Houthi rebels ramp up attacks

The Strait of Hormuz remains a bottleneck for vessel traffic, with the US, Saudi Arabia, and Iran escalating their attacks and efforts to control shipping. In response to Iran's attacks on US forces, the US and Saudi Arabia carried out airstrikes on Iranian proxy groups in Iraq, targeting IRGC military command centers, missile and drone facilities, and coastal surveillance and defense sites. Iran retaliated by attacking Jordan's Al-Azraq Air Base with ballistic missiles.

The US and Iran have been engaged in a standoff over the Strait of Hormuz, with Iran attempting to tighten control over shipping activity and funnel funds into IRGC operations. The US has sanctioned two Iranian companies, Persian Gulf Marine Insurance Company and HormuzSafe Marine Services Authority, for their involvement in these activities.

Concerns have also emerged over passage through the Bab el-Mandeb Strait, following Yemen's Houthi Rebels firing ballistic missiles at a Saudi oil tanker in the Red Sea. This has led to increased risks of supply disruptions in the Black Sea, where tankers scheduled to load at the Caspian Pipeline Consortium terminal have been diverted due to a vessel being hit during loading.

Despite these developments, transits through the Bab el-Mandeb Strait have been higher than in recent weeks, with hopes raised by ongoing talks between Iran and Oman regarding the potential reopening of the Strait of Hormuz. The closure of these straits has had significant impacts on crude oil and chemical markets, with around one-third of global seaborne crude flows and up to 20% of the world's total oil flows passing through the Strait of Hormuz.