Iran’s Revolutionary Guard has threatened to close the Bab el-Mandeb Strait, a critical Red Sea choke point, which poses a significant vulnerability for global oil markets. This strait has been essential for rerouting millions of barrels of Saudi Arabian oil to Asia after disruptions in the Strait of Hormuz, acting as a crucial relief valve. Should Iran’s Houthi allies act on this threat, it would cut off vital supplies, leading to a major escalation and potentially skyrocketing crude prices, further destabilizing the fragile Middle East.
President Donald Trump's administration faces a critical challenge as Iran threatens to close the Bab el-Mandeb Strait, a vital Red Sea choke point, which could severely disrupt global oil supplies amid an already volatile Middle East. This strategic waterway, connecting the Red Sea to the Gulf of Aden and the Arabian Sea, has served as a crucial bypass for oil exports, especially as the Strait of Hormuz experienced significant disruptions due to Iranian attacks on tanker and cargo vessels.
In response to the Hormuz closures, Saudi Arabia dramatically increased oil flows through its East-West Pipeline, rerouting millions of barrels per day to the Red Sea. These barrels then transit the Bab el-Mandeb en route to key Asian economies like Japan and South Korea, helping to mitigate some of the supply losses. Data from Kpler indicates that oil and product exports through the Bab el-Mandeb nearly doubled in April, reaching 7.2 million barrels per day, up from 3.9 million bpd in February, prior to heightened U.S. and Israeli military actions against Iran.
This week, Iran's Revolutionary Guard issued a stark warning, threatening to close the Bab el-Mandeb Strait if Israel's military operations in Gaza and Lebanon do not cease. Reported by the Iranian state news agency Tasnim, Tehran insists that any peace agreement with the U.S. must include Israel's withdrawal from Lebanon. Such a closure would immediately sever Saudi oil shipments to Asia, an escalation that Matt Smith, director of commodity research at Kpler, described as a significant market impact. He emphasized that the uninterrupted flow through the Red Sea has been a key factor in preventing crude prices from skyrocketing.
Indeed, U.S. crude oil prices surged by 8% at their session high following Iran's threat. While prices saw a partial retreat after Israel and Lebanon reportedly agreed to a ceasefire, the truce's implementation remains uncertain. Iran's Lebanese ally Hezbollah, which acts independently from the government in Beirut, rejected the ceasefire deal, and Israeli Prime Minister Benjamin Netanyahu told CNBC on Wednesday that "we have to disarm Hezbollah and we have to demilitarize Lebanon."
The broader ceasefire between the U.S. and Iran remains precarious, with recent exchanges of fire in and around the Strait of Hormuz. Experts like Smith suggest that a U.S. escalation of military action could prompt Iran to target Bab el-Mandeb as a retaliatory measure. Iran's Houthi allies in Yemen, though largely quiescent in the current conflict, have a history of disrupting Red Sea shipping. From 2023 to 2025, the Houthis attacked commercial ships in the Red Sea in retaliation for Israel's war in Gaza, causing traffic through Bab el-Mandeb to plummet and never fully recover. A previous 52-day air campaign by the Trump administration against the Houthis ended in May 2025 with a ceasefire, contingent on the militants halting attacks on U.S.-flagged ships.
Jack Kennedy, head of Middle East country risk at S&P Global Market Intelligence, notes that the Houthis might be strategically waiting for the opportune moment to open another front. Smith added that the Houthis wouldn't need widespread attacks to cripple traffic through the strait. "They wouldn't have to fire at every single tanker that was passing through there," the Kpler analyst said. "Some specific targets would be enough to start deterring the passage through there," he warned, underscoring the severe vulnerability this vital choke point presents to the global oil market.
