Standard Chartered Warns Oil Markets Must Now Account for Two Middle East Chokepoints
Oil markets are facing heightened risks as the Houthi militant group has imposed a maritime blockade on Saudi-linked vessels transiting through the Bab el-Mandeb Strait, adding to existing tensions at the Strait of Hormuz. This development forced several very large crude carriers (VLCCs) to reroute around Africa’s Cape of Good Hope, increasing transit times and costs. Standard Chartered highlights that this expansion from one to two strategic chokepoints could have lasting implications for global oil trade flows. The attacks on Saudi tankers by the Houthis prompted a sharp rise in Brent crude prices before markets retreated slightly amid diplomatic efforts between U.S. and Iran backed by China. The bank estimates around 7 million barrels per day were transiting through Bab el-Mandeb prior to disruptions, making it one of the world’s most critical oil corridors. Disruptions are expected to increase freight costs, delay deliveries, and tighten insurance markets. Standard Chartered warns that further instability could force Saudi Arabia to cut production due to limited capacity on alternative routes. European refiners may be particularly affected as they already face supply constraints from ongoing conflicts in Ukraine impacting Russian exports.
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Topics: Bab_el-Mandeb_blockade Houthi_attacks Middle_East_conflict oil_prices