Iran's threats against this Red Sea choke point are a big vulnerability for the oil market

Key points

• President Donald Trump faces the risk that Iran will close the Bab el-Mandeb Strait if the conflict in the Middle East escalates, a scenario that would slash oil supplies to an already deeply disrupted market.
• The Bab el-Mandeb is one of the world's key trade choke points, connecting the Red Sea to the Gulf of Aden and the Arabian Sea.
• It has acted as a crucial relief valve for the oil market as exports through the Strait of Hormuz have plunged due to Iranian attacks on tanker and cargo ships.
• Saudi Arabia surged oil flows through its East-West Pipeline after the Hormuz closed, redirecting millions of barrels per day to the Red Sea.
• Those barrels are transiting the Bab el-Mandeb to Asia, which has helped offset some of the lost supply to key economies like Japan and South Korea.