Iran's threats against this Red Sea choke point are a big vulnerability for the oil market
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
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.
Oil and product exports through the Bab el-Mandeb nearly doubled to 7.2 million barrels per day in April compared with 3.9 million bpd in February before the U.S. and Israel attacked Iran, according to data provided by Kpler. Iran's Revolutionary Guard threatened Monday to close the Bab el-Mandeb if Israel did not halt strikes in Gaza and Lebanon, according to the Iranian state news agency Tasnim.
Tehran has insisted that any peace deal with the U.S. must include the withdrawal of Israel from Lebanon.
The BriefWire