No salvation through the Suez Canal: The second strait becomes a weapon – How the Houthis and Iran are tightening their grip on the global economy

Why global shipping is on the verge of collapse: Oil prices about to explode – The dangerous alliance is blocking Europe's most important trade route

Global energy supplies and international supply chains are heading towards a logistical and geopolitical crisis: While Iran is blocking the strategically vital Strait of Hormuz, the Bab al-Mandab Strait in the Red Sea, a second key bottleneck for global oil and trade, is now also under threat. The Yemeni Houthi militia is making good on its threats and is specifically targeting the remaining alternative routes. For international merchant shipping, this scenario is like a dangerous pincer movement, leaving hardly any safe and economically viable escape routes. With rapidly rising insurance premiums, drastically longer transport routes, and the real threat of another oil price shock, Europe, and especially export-oriented nations like Germany, face immense economic challenges. The following article analyzes the background of this fatal double blockade and shows why even alternative routes such as the Cape of Good Hope or the Suez Canal can no longer mitigate the impending bottlenecks.

If Bab al-Mandab becomes a repeat of Hormuz, the global economy will lose its last safe haven

The global economy has had to adjust to an unfamiliar reality in recent months: oil trade is no longer dependent on one, but on two critical bottlenecks simultaneously. With the Strait of Hormuz already significantly restricted by Iran's ongoing blockade, a second crucial shipping route, the Bab al-Mandab at the southern end of the Red Sea, is now threatening to collapse. The Iranian-backed Houthi militia in Yemen has announced a naval blockade against Saudi Arabia and, according to its own statements, has forced several tankers to turn back within a very short time. Independent confirmation has so far confirmed three ships that were originally bound for China and India and are now taking the northern detour via the Suez Canal. What initially appeared to be a symbolic show of force is developing into a serious structural threat to global energy supplies.

Geography as a strategic Achilles heel

The Bab al-Mandab, literally the Gate of Tears, is a narrow strait, only about 30 kilometers wide, between Yemen and the African continent. It connects the Indian Ocean to the Mediterranean Sea via the Red Sea and the Suez Canal, thus forming the shortest sea route between Asia and Europe. For oil tankers, container ships, and liquefied natural gas (LNG) carriers, this route has been indispensable for decades because the alternative—circling Africa via the Cape of Good Hope—adds ten to fourteen days to the journey and drastically increases transport costs. This very narrowness of the strait also makes it an ideal target for asymmetric warfare. From the high ground along the Yemeni coast, the Houthis, with their arsenal of rockets, drones, and cruise missiles, can reach virtually any ship crossing the strait without needing a regular navy.

The motives behind the new escalation

The current escalation is not an isolated event, but rather the continuation of a conflict that has repeatedly reignited since the beginning of the Gaza War in 2023. At that time, the Houthis began attacking ships they deemed affiliated with Israel, the US, or Britain, forcing numerous shipping companies to permanently bypass Africa. Following the ceasefire in Gaza in October 2025, a temporary lull returned, until the militia rejoined the war in the wake of the renewed confrontation between Iran, Israel, and the US. The latest escalation is now explicitly directed against Saudi Arabia and is closely linked to the Iranian blockade of the Strait of Hormuz. Because the kingdom has increasingly rerouted its oil exports through pipelines and ports on its western coast to the Red Sea due to the blockade in the Persian Gulf, the Houthi action aims to close precisely this route and completely cut Saudi Arabia off from its Asian markets. The militia also cites a recent attack on the international airport in Sanaa, the capital city it controls, as a motive for retaliation.

How far does the threat actually extend?

Despite the dramatic reporting, a nuanced examination of the actual extent of the blockade is warranted. So far, the Houthis have not announced a complete closure of the strait to all shipping traffic. According to the militia's official statement, the danger exists only for ships calling at Saudi ports to load or unload cargo. Freighters without a direct connection to the kingdom are supposedly able to pass unhindered. However, experience from 2023 to 2025 shows that this distinction is hardly reliable in practice. During a similar blockade directed against Israel, the Houthis repeatedly attacked ships that had virtually no connection to Israel. Analysts therefore warn that any ship transporting Saudi oil or heading to Saudi ports is effectively in the crosshairs, regardless of ownership structure or flag. Three Yemeni Houthi representatives also reported that the group had spent months planning how to disrupt shipping traffic through the strait using sea mines, explosive-laden boats, drones and helicopters in order to bring fighters on board.

The comparison with the Strait of Hormuz

The Strait of Hormuz has always been considered the world's most vulnerable oil route, as it traditionally carries nearly a fifth of global oil trade. The Bab al-Mandab Strait is less significant in terms of volume, but by no means negligible. Before the escalation of recent years, an average of 8.8 to 9.3 million barrels of oil per day were transported through the strait. The attacks of 2023 and 2024 already caused this volume to plummet to approximately 4.1 million barrels per day, a decline of well over fifty percent. If a complete closure were to occur, particularly affecting Saudi exports, market observers estimate that this could reduce the global oil supply by up to seven percent. While this may seem moderate at first glance, in a market already strained by the Hormuz blockade, this additional supply shock could have a disproportionate impact on prices, as reserve capacities and alternative transport routes would be simultaneously exhausted.

Why detouring via Suez only works to a limited extent

One obvious idea would be for tankers to simply bypass the threatened coastline and instead enter the Suez Canal directly. This is precisely what the three confirmed vessels did, which were originally en route to China and India and have now turned north towards the Suez Canal. However, the problem with this evasive strategy lies in the physics of shipping itself. Many of the largest oil tankers, especially Suezmax and VLCC classes, are simply too large to transit the Suez Canal fully loaded, or must accept significant cargo reductions to do so. For a substantial portion of the Saudi export fleet, bypassing the Suez Canal is therefore not a viable alternative, but only a partial solution. The only remaining option is to circumnavigate Africa entirely via the Cape of Good Hope, which significantly increases transit times and freight costs and effectively reduces global tanker capacity, even if not a single barrel of oil is physically lost.

The reaction of the financial markets

Oil markets reacted to the latest developments with noticeable, albeit still moderate, nervousness. The price of Brent crude has risen from around $84 to about $92 per barrel since last Friday, an increase of roughly nine percent within just a few trading days. Previously, the combined escalation at the Hormuz and Bab al-Mandab straits had already caused oil prices to surge by more than eight percent to around $94 at one point. Market observers from energy consultancies such as Energy Aspects see this price reaction as typical behavior in a situation where traders are looking for new catalysts for a further rally, after tensions between the US and Iran had already driven prices higher. Should the blockade actually intensify and seriously disrupt oil supplies, industry experts expect a rise to between $115 and $120 per barrel. Although the historic all-time high of $147 from 2008 is still some way off, a price level above $110 would already entail considerable economic burdens, especially for energy-importing economies such as Germany and large parts of Europe.

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Insurance premiums as an early indicator

A particularly revealing indicator of the perceived risk level, because it is directly measurable, is the development of war risk insurance for ships crossing the Red Sea. This risk premium has more than doubled within just a few days, rising from 0.3 to 0.75 percent of the respective ship's value. For a single oil tanker with an insured value in the high tens of millions, this translates into additional costs of several hundred thousand euros per transit. These costs are ultimately passed on to end consumers via freight rates, effectively acting as a hidden tax on international trade long before a single ship is actually physically attacked. At the same time, European diesel refinery margins climbed to a record high of over US$65 per barrel, a clear signal that market participants are already pricing in a shortage of middle distillates such as diesel and kerosene, which are traditionally shipped in large quantities from the Middle East to Europe and Asia.

Saudi Arabia's precarious position

For Saudi Arabia, the world's largest exporter of crude oil, the situation is particularly precarious because the kingdom is caught in a kind of geographical pincer movement by the dual blockade. The eastern route through the Strait of Hormuz is already severely restricted due to the Iranian blockade, which is why Riyadh has increasingly redirected its exports via pipelines to the west coast and from there across the Red Sea. It is precisely this escape route that the Houthis are now attempting to block. The Saudi military leadership has publicly declared its intention to keep the Bab al-Mandab Strait open and has denounced any threat to passing ships as a blatant violation of international law and an act of maritime piracy. Whether Riyadh can actually follow through with military action on this announcement is another question, as the Saudi navy is only partially equipped to defend such an extensive and asymmetrically threatened coastline. For the kingdom, this is not just about economic revenue, but also about its geopolitical standing as a reliable global energy supplier, which would be significantly damaged by continued export disruptions.

The geopolitical dimension and the role of the USA

US President Trump has already threatened the Houthis with heavy military action, emphasizing that the United States has acted hard against the militia in the past and would do so again if necessary. This announcement follows a pattern of repeated Western military strikes against Houthi positions in Yemen, which, however, have had only a limited deterrent effect in the past. For over two years, the militia has demonstrated that, despite international airstrikes, it remains capable and willing to back up its threats with actual action. Furthermore, the linking of the Yemeni conflict to the larger regional confrontation between Iran, Israel, and the US exacerbates the risk of an uncontrolled spiral of escalation, in which local actors like the Houthis increasingly act as an extension of Iranian interests, without Tehran needing to be directly militarily involved. For international diplomacy, this means a considerably more complex starting point, because de-escalation on one front, for example through new negotiations between Washington and Tehran, does not automatically ease the situation in the Red Sea.

Impact on supply chains and shipping companies

For the global shipping industry, this renewed uncertainty is a bitter disappointment, as major liner shipping companies like Maersk and CMA CGM had only just begun to cautiously return to their original route through the Suez Canal in recent months, following the initial easing of tensions brought by the ceasefire in Gaza. Even after this cautious return, container and cargo volumes through the Bab al-Mandab were still well over sixty percent below pre-crisis levels in 2023. The new threats are likely to bring this fragile normalization process to another abrupt halt. Industry experts like Lars Jensen of the consulting firm Vespucci Maritime point out that the Houthis have repeatedly demonstrated over the past two years not only their exceptional capability but also their unwavering willingness to translate threats into actual attacks. For shipping companies, this presents a dilemma between short-term cost savings from the faster route and the risk of substantial insurance and reputational damage in the event of an attack.

Consequences for Germany and Europe

For the German and European economies, which are heavily dependent on imported energy sources, a sustained shortage of oil and diesel shipments through the Red Sea would have immediate consequences. Higher crude oil prices are reflected, albeit with a time lag, in the prices of fuels, heating oil, and ultimately in broader inflation. The diesel market is particularly sensitive because Europe traditionally sources a significant portion of its middle distillate from the Middle East via the corresponding refining capacities in the Persian Gulf and the Red Sea. The record margins already observed in diesel refining indicate that market participants are preparing for precisely this scenario. For export-oriented German industries, especially in the logistics, chemical, and energy-intensive manufacturing sectors, this means additional cost pressure in an already fragile economic phase, while at the same time, transport costs for container freight from Asia are likely to rise due to longer transit times and higher insurance premiums.

A look at possible scenarios

Three fundamental development paths can be outlined from today's perspective. In the best-case scenario, the Houthi threat remains largely symbolic, limited to occasional warning shots and isolated forced course corrections, without systematic attacks on tankers, similar to the temporary lull following the Gaza ceasefire. In a medium scenario, a kind of permanent state of heightened but controlled threat establishes itself, as was already observed between 2023 and 2025, with structurally reduced but not completely interrupted tanker passages and permanently increased insurance costs. In the most pessimistic scenario, the conflict escalates into a truly comprehensive military confrontation in which the Houthis actually deploy their announced capabilities in naval mines and drone strikes, while the Strait of Hormuz remains blocked. In this case, a serious global energy crisis with oil prices well above $120 would no longer be a mere possibility but a real danger, which, according to industry experts, even has the potential to trigger a global recession.

A fragile double blockage

The crucial lesson to be learned from current developments is that, for the first time in many years, the global economy is confronted with the real possibility that two of the world's most important oil shipping lanes could be significantly restricted simultaneously. This combination fundamentally distinguishes the current situation from previous, isolated crises at individual straits, because it leaves virtually no alternative routes and structurally overburdens the remaining capacities. Whether the Houthi threat will actually develop into a complete and permanent blockade, or, as has frequently been observed in the past, subside after an initial escalation, cannot currently be reliably predicted. However, it is already clear that the mere announcement of a blockade is having measurable economic consequences, from rising oil prices and exploding insurance premiums to record margins in diesel refining. For companies, investors, and political decision-makers in Europe, this means that the risk premium for geopolitical uncertainty in the energy sector can no longer be ignored for the foreseeable future, but must be factored in as a permanent component of economic calculations.

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