Iran's threats against this Red Sea choke point are a big vulnerability for the oil market
Oil prices would spike if Iran's Houthi allies started attacking ships passing through the Bab el-Mandeb Strait.
TL;DR
- Iran has threatened to close the Bab el-Mandeb Strait, a vital oil trade route, if the conflict in the Middle East escalates.
- This action would severely disrupt global oil supplies, particularly cutting off barrels from Saudi Arabia heading to Asia.
- Exports through the Bab el-Mandeb have nearly doubled since February, highlighting its importance to the oil market.
- A fragile ceasefire between Israel and Lebanon is in question, with Hezbollah rejecting the deal, increasing the risk of further escalation.
- Previous attacks by Iran's Houthi allies in Yemen on commercial ships in the Red Sea caused traffic through the Bab el-Mandeb to plunge.