The Houthis have escalated tensions by closing the Bab el-Mandeb Strait, a critical maritime chokepoint, effectively threatening 60% of Middle East oil exports. This development comes amidst heightened hostilities involving the Iran–US–Israel conflict, where the IRGC has also closed the Strait of Hormuz, further exacerbating the situation. The IRGC warned vessels to avoid the area before striking two ships, underscoring the gravity of the situation and the potential for significant disruptions to global oil supplies.
The Bab el-Mandeb Strait, controlled by the Houthis since 2023, is a strategic passage for energy exports. The closure of this route, along with the Strait of Hormuz, poses a dual threat to global seaborne oil and gas transport, which could lead to major supply chain disruptions and significant economic repercussions. Market participants appear to interpret these events as increasing the likelihood of an effective closure of the Bab el-Mandeb Strait by September 30, as reflected in the recent rise in market pricing for this outcome.
Currently, the market for whether the Bab el-Mandeb Strait will be effectively closed by September 30 shows an 18.5% probability of a YES outcome, up from 8% a week ago. This increase suggests that participants view the current geopolitical tensions and military actions in the region as consistent with a scenario where the strait remains closed.
