S. Korean, Iranian FMs hold phone talks over Strait of Hormuz issues

The world remains constrained in a precarious position between the Red Sea and the Strait of Hormuz, two narrow waterways of immense economic significance. Even though their sizes are limited, their importance to the global economy is disproportionate. A deepening instability in these areas could have far-reaching consequences, affecting energy markets, shipping routes, insurance premiums, and ultimately, the everyday cost of living in Asia and across the ASEAN region.

The ongoing conflict in Yemen is thus a matter of greater concern than it has been previously. The Houthi movement is striving to solidify its control along Yemen's Red Sea coast, which could lead to increased Houthi influence near Bab el-Mandeb, the crucial passage connecting the Red Sea with the Gulf of Aden and the Indian Ocean.

This situation cannot be viewed solely as an extension of Yemen's ongoing civil war; it fundamentally alters the strategic geography of the Arabian Peninsula, placing Saudi Arabia and some of the world's most significant oil and gas infrastructure in the crosshairs. This situation resembles a geopolitical pincer movement, with Iran's ongoing confrontation in Hormuz and the Houthi conflict in Bab el-Mandeb creating a complex strategic dilemma.

The vulnerability of international trade depends on predictability, calculable risks, and expectations. A few missiles, drones, or attacks on commercial vessels can cause immense economic damage, even if these actions do not result in complete control of the chokepoints. Shipping companies may reroute vessels, insurance premiums will rise, delivery times will lengthen, and freight charges will increase.

Energy traders will incorporate geopolitical uncertainty into oil and gas prices, leading to a ripple effect across the global economy. This is a form of asymmetric warfare targeting maritime geography, a concept well understood by Iran and the Houthis. The strategic problem facing Saudi Arabia is becoming increasingly complex, as Riyadh has long recognized the vulnerability associated with dependence on Hormuz and developed infrastructure for some oil exports to move westwards towards the Red Sea.

However, a bypass around one chokepoint becomes less reassuring when another chokepoint becomes unstable. This is why developments around Yemen's Red Sea coast are of paramount importance. If pressure persists around Hormuz while insecurity intensifies around Bab el-Mandeb, Saudi Arabia and the Gulf economies could face strategic uncertainty on two maritime fronts simultaneously.

The United States faces a similar challenge, as its military power, while formidable, cannot alter the geography or guarantee the safety of commercial vessels through narrow waterways dominated by potentially hostile forces, particularly when faced with the threat of drones. This highlights the uncomfortable reality of asymmetric warfare, where a weaker actor does not necessarily need to defeat a stronger power militarily but can impose sufficient costs to alter the stronger power's calculations.

Iran's capabilities surpass those of the Houthis, and if Iran's pressure around Hormuz coincides with sustained Houthi pressure around Bab el-Mandeb, the result could be a single interconnected maritime-security crisis stretching across the Arabian Peninsula. ASEAN cannot afford to see this as someone else's problem. Though geographically distant from Yemen and Iran, Southeast Asia is economically deeply connected to both waterways.

While Malaysia, Indonesia, and Brunei may possess their own hydrocarbon resources, their economies remain exposed to global energy prices. Singapore, as one of the world's most important maritime, refining, financial, and logistical centers, is heavily dependent on international trade and imported energy. Thailand, the Philippines, and Vietnam also rely heavily on international trade and imported energy.

Across ASEAN, higher shipping costs eventually translate into higher production costs, while higher oil prices impact transportation and electricity. Higher insurance premiums become an invisible tax on trade, and inflation can spread much further than missiles. This situation is especially critical when ASEAN economies are concurrently grappling with slower global growth, supply-chain restructuring, technological competition between the United States and China, and the substantial investment requirements associated with green and digital transitions.

The situation calls for diplomacy on a scale befitting the geography. The Strait of Hormuz must return to normal commercial navigation, and the Yemeni conflict should not transform Bab el-Mandeb into another permanent theater of maritime confrontation. Saudi Arabia and its allies must work together to address these challenges before the situation spirals out of control.