As the war in the Middle East draws in another player, attention is turning to a second vital shipping route that could become the next pressure point for global oil supply.
For weeks, all eyes have been on the Strait of Hormuz, after Iran began blocking oil transit through the channel in response to US and Israeli strikes, triggering some of the worst global oil shocks in history.
Over the weekend, Yemen’s Iran-aligned Houthis launched missiles at Israel for the first time since the current conflict with Iran began, pointing to a potential new threat to global shipping — this time to the Bab al-Mandab Strait, or “Gate of Tears”.
Named for the dangerous conditions and shipwrecks that historically plagued the narrow waterway off the coast of Yemen, the strait carries about 8 to 9 per cent of the world’s seaborne oil.
About 30km wide, it connects the Red Sea to the Gulf of Aden and forms a key link in one of the world’s most important trade corridors, the Suez Canal shipping route.
That shipping route connects Asia and Europe via the Red Sea, allowing vessels to avoid the substantially longer and more costly journey around Africa’s Cape of Good Hope.
The Houthis have shown an ability to strike targets far beyond Yemen and disrupt shipping lanes around the Arabian Peninsula and the Red Sea, as they did in support of Hamas for much of its conflict with Israel since October 2023.
The armed group, designated a terrorist organisation in Australia, said they were prepared to act in the event of further escalation against Iran.
How important is the Bab al-Mandab Strait?
Very — particularly under current circumstances, according to David Leaney, a specialist in international supply chain management at the Australian National University.
While the Strait of Hormuz plays a bigger role in global oil trade, the Suez shipping route carries a larger share of the world’s non-oil-related shipping.
“It’s nearly as important for oil, and it’s more important for global shipping,” he told SBS News.
About 10 to 12 per cent of global seaborne trade passes through the Suez route — a corridor bottlenecked by the Suez Canal to the north and the Bab al-Mandab Strait to the south.
Key cargoes include crude oil, liquified natural gas (LNG), food, containerised goods, and urea, a chemical used in fertilisers and diesel exhaust fluids.
A full closure, or even sustained high-risk disruption to the strait, would not just be a regional issue, Leaney said.
“It would reshape shipping patterns, energy markets, and geopolitical behaviour worldwide.”
While it’s not immediately clear how badly nearly two years of conflict with the US and Israel depleted the Houthis, Israel killed a dozen members of their senior leadership.
In August, Israel killed the Houthi prime minister, the chief of staff and several cabinet ministers in an airstrike, but Abdul Malik Al-Houthi, the movement’s leader, was not there.
Simultaneous closure of both straits ‘catastrophic’
There has never been a simultaneous closure of both the Strait of Hormuz and the Bab al-Mandab Strait, and it would be disastrous if that happened, Leaney said.
Currently, two oil pipelines across Saudi Arabia and the United Arab Emirates are helping to ease pressure on global oil supply created by Iran’s blockade of the Strait of Hormuz.
The longer of the two, the Saudi East-West Crude Oil Pipeline, runs from oil fields on the country’s east coast to the port of Yanbu on the Red Sea.
It was built in response to the Iran-Iraq war in the 1980s, when attacks on oil tankers exposed the vulnerability of shipping routes through the Strait of Hormuz.
The narrow exit at the northern end of the Red Sea, the Suez Canal, is not designed to accommodate the largest oil tankers.
In 2021, the waterway was blocked for nearly a week when a large container ship became wedged across a single-lane stretch of the canal.
If the Bab al-Mandab Strait were closed, much of the oil arriving in the Red Sea via the East-West pipeline could be effectively trapped, Leaney said.
“Now that would be catastrophic, because it would mean 28 to 29 per cent of the world’s fuel supply being blocked off at the same time.”
What would it mean for Australian consumers?
Disruptions to goods shipped through the Suez route could leave Australians facing further price increases for fuel and further shortages of fertiliser, with knock-on impacts for agriculture.
It could also tighten global LNG supply.
While Australia is a major LNG exporter, that could push up export prices — and in turn raise domestic costs, adding to cost-of-living pressures, Leaney said.
“If you push up the price of natural gas, you’re actually pushing up the price of electricity as well, which pushes up cost of living, pushes up inflation, upwards pressure on interest rates.”
‘A card in Iran’s hands they have yet to play’
The Houthi attacks on Israel represent “a new front in the Middle East conflict — and opens an additional challenge for Israel as they expand their own ground invasion of Lebanon”, said Dr Jessie Moritz, senior lecturer at the Australian National University’s Centre for Arab and Islamic Studies.
An escalation in the Red Sea would create yet another front, she told SBS News, though at this stage, it remains “a card in Iran’s hands that they have yet to play”.
Iran and the Houthis appear to be holding the threat of disrupting the shipping lane as a potential retaliation to a US ground invasion, Moritz said, but an escalation could occur regardless.
“Another challenge is that proxies can be erratic, and there are risks that key groups within the Houthis could decide to escalate even as others are engaged in mediation with the US or other actors about seeking an off-ramp,” she said.
The Houthis proved “extremely effective” at disrupting shipping in the Red Sea in 2023, she noted, despite the deployment of a US-led naval coalition.
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