Hormuz choked, Red Sea threatened: How will oil get through?

The Strait of Hormuz, a vital shipping route for Middle East oil, has been under pressure due to Iran's restrictions. Saudi Arabia and other producers have had to rely more on alternative routes, especially through the Red Sea. However, the advance of Iran-backed Houthi militants along Yemen's western coast has put renewed pressure on the Bab Al Mandab, the narrow waterway connecting the Red Sea with the Gulf of Aden.

The Houthi capture of strategic ports like Mocha and Perim has increased concerns over shipping through this route. This presents an increasingly difficult challenge for energy markets: if Hormuz remains constrained and the Red Sea becomes more dangerous, how will the region's oil get through? While the Red Sea remains an alternative for Saudi Arabia, as it can move crude westwards and export from Red Sea terminals, vessels traveling through Bab Al Mandab towards Asia or the Suez Canal and Mediterranean are facing increased risks.

Iran has deployed hundreds of IRGC officers to Yemen to target the Bab Al Mandab Strait, and the Houthi capture of Mocha and Perim has given the group a stronger position around the chokepoint. As a result, energy markets are feeling the pressure, with oil prices briefly reaching above $108 a barrel following escalating attacks by the Houthis.