Iran has threatened to close the Bab el-Mandeb Strait, a vital Red Sea shipping lane, raising concerns about global oil supply stability. This strait has become crucial for redirecting millions of barrels of oil daily, particularly from Saudi Arabia, as an alternative to the Strait of Hormuz.
An interruption at the Bab el-Mandeb could significantly impact oil prices and disrupt key Asian energy imports. The threat follows heightened tensions in the Middle East and follows previous Houthi attacks in the Red Sea.
Iran's Threats to Red Sea Choke Point Pose Significant Oil Market Risk
Iran's Revolutionary Guard has issued a stark warning, threatening to close the Bab el-Mandeb Strait, a critical maritime choke point at the southern end of the Red Sea. This potential action represents a significant vulnerability for the global oil market, which has increasingly relied on this route as a vital alternative to the Strait of Hormuz, especially during times of conflict.
The Bab el-Mandeb Strait, connecting the Red Sea to the Gulf of Aden and the Arabian Sea, has become a crucial 'relief valve' for oil traders. As exports through the Strait of Hormuz have faced disruptions due to Iranian actions, Saudi Arabia has significantly rerouted millions of barrels of oil per day to the Red Sea via its East-West Pipeline. These redirected supplies then transit through the Bab el-Mandeb, en route to key Asian economies like Japan and South Korea.
Data from Kpler indicates a substantial increase in oil and product exports through the Bab el-Mandeb, nearly doubling to 7.2 million barrels per day in April compared to 3.9 million barrels per day in February, prior to heightened tensions. This surge highlights the strait's growing importance in maintaining global oil supply stability.
The Iranian threat, issued in response to Israeli actions in Gaza and Lebanon, could have immediate and severe consequences. "That would be a step up in terms of escalation and in terms of market impact," stated Matt Smith, director of commodity research at Kpler. The flow of oil through the Red Sea has been a key factor in preventing crude prices from escalating further. An interruption here could directly impact these mitigating factors.
Following Iran's threat, U.S. crude oil prices saw a notable spike of 8% intra-day on Monday. While prices moderated somewhat after reports of a potential ceasefire between Israel and Lebanon, the stability of this truce remains uncertain, especially with Hezbollah rejecting the deal. The fragile ceasefire between the U.S. and Iran itself is also a point of concern, following recent exchanges in the Strait of Hormuz.
Analysts suggest that if the U.S. escalates military actions, Iran's most logical response would be to target the Bab el-Mandeb. While Iran's Houthi allies in Yemen have been less active in the current conflict compared to their previous attacks on Red Sea shipping from 2023 to 2025, their potential involvement remains a significant factor. The Houthis could disrupt traffic through the Bab el-Mandeb with targeted attacks, even without engaging every vessel, creating enough uncertainty to deter passage.
The Trump administration previously engaged in a 52-day air campaign against the Houthis, which concluded with a ceasefire in May 2025, contingent on the militants halting attacks on U.S.-flagged ships. The Houthis may be strategically waiting for the opportune moment to re-engage, potentially when Iran deems it advantageous to open a new front.
The situation underscores the delicate balance of global oil supply and the significant impact geopolitical events in critical maritime regions can have on market stability. Any escalation involving the Bab el-Mandeb Strait could lead to substantial disruptions and price volatility.
