Bab al-Mandab Strait: A global chokepoint amid recent Houthi attacks

Much of the world’s attention has recently been focused on the Middle East, where fighting is still underway. Against this backdrop, a kind of geopolitical chess game has begun to unfold in the region, with significant repercussions for the oil and gas sectors, particularly transportation. Although initial concerns centred on instability in the Strait of Hormuz, the main flashpoint is now another important chokepoint: Bab al-Mandab. This article is therefore in some ways a follow-up to the previous article on the Strait of Hormuz, and similarly examines its importance to global trade in oil and natural gas.

Bab al-Mandab is a narrow strait separating the Red Sea and the Gulf of Aden. Its name translates as “Gate of Tears”, and it is a key geographical point on the two-way route between the Mediterranean Sea and the Indian Ocean. Regular shipping passes through the strait, which is approximately thirty kilometres wide, with channels designated for each direction to ensure smooth traffic. As for the countries along its shores, the coast of Eritrea and Djibouti runs along its western side, while Yemen controls the eastern side. The current problems stem from the east.

The volume of oil transported along this route has increased considerably in recent years. In 2014, it was approximately 5.1 million barrels, rising to 6.2 million barrels per day (bpd) in 2018. The latest data put the figure at 7.8 million bpd in 2023. Globally, about 12% of all oil traded by sea passes through the strait. It also carries around 8% of global trade in liquefied natural gas (LNG).

Recent attacks by Yemeni rebels are therefore also attacks on global trade, as shipping companies will be reluctant to send their vessels into such an unstable area. That is precisely the point of the attacks: by disrupting maritime trade, the Houthis are expressing support for Palestinian Hamas while also demonstrating to the world their retaliation for support of Israel. It should be noted that the rebels have strong ties to regional hegemon Iran.

The consequences of the attacks were not long in coming. In December last year, London’s Joint War Committee expanded the high-risk zone in the Red Sea, prompting a rise in marine insurance premiums. These are reported to have reached 0.5-0.7% of a ship’s value, compared with 0.07% at the beginning of December. This has significantly increased the cost of shipping, including all other charges, and oil prices are rising as well.

Shipping companies are caught in a bind, as the only alternative route is to sail around the whole of Africa via the Cape of Good Hope. In practice, however, this means an extra 7400 kilometres and 14 days at sea, making little economic sense under normal conditions. But that is of little consequence when the region is in crisis and safety is seriously at risk.

We are therefore increasingly seeing shipping companies announce that they are suspending transit through Bab al-Mandab. This includes major oil companies. British company BP, for example, suspended its tankers’ voyages indefinitely in December. Norway’s Frontline group also said it would avoid the strait. On Friday, tanker companies Hafnia, Torm and Stena Bulk did the same.