Yemen’s Houthi rebels launched a series of missile attacks targeting military sites in Israel over the weekend, marking a significant escalation of the conflict in the Middle East and raising concerns about potential disruptions to global oil trade. The attacks, confirmed by Israeli officials, represent a direct entry by the Iran-backed group into the wider regional conflict sparked by the October 7th attacks on Israel by Hamas.
The Houthis, who control parts of Yemen’s western coastline including the strategic port city of Hodeidah, possess the capability to threaten maritime traffic through the Bab al-Mandab Strait – a narrow waterway connecting the Red Sea to the Gulf of Aden and the Indian Ocean. While no formal blockade has been announced, and the strait remains open to all vessels, including those flying American or Israeli flags, the potential for disruption is now a major concern for international shipping.
Experts warn that the Houthis’ actions could layer complexity onto ongoing peace talks and, critically, allow Iran to exert greater control over regional seaborne oil trade, which accounts for approximately 30 to 35 percent of global supply. “This marks a serious and deeply concerning escalation,” said one analyst, speaking on background. “It significantly expands the geographic scope of the conflict and introduces a new dimension of risk to global energy markets.”
The Bab al-Mandab Strait, prior to recent disruptions, saw between 10 and 12 percent of the world’s seaborne crude oil transit through it, with peak flows reaching 8.7 to 9.3 million barrels daily in early 2023. However, Houthi strikes on shipping lanes throughout 2023 and 2024 led to a significant decrease in traffic. Data from S&P Global indicated a drop of over 50 percent in tonnage transiting the strait by mid-December 2023, prompting some shipping firms to reroute traffic around the Cape of Good Hope.
By the first half of 2025, daily volume had fallen to 4.1 million barrels. A recent surge in traffic – a 21 percent increase in the first 28 days of March compared to February, as reported by CNN – appears to have prompted the Houthis’ latest move. This increase likely signaled a vulnerability that Iran and its proxy sought to exploit.
Rerouting ships around Africa adds significant costs and time to voyages, driving up freight rates and ultimately increasing the price of oil and other goods. Freight costs for crude oil have increased by an estimated $2 per barrel, while charter rates for Very Large Crude Carriers (VLCCs) – capable of carrying up to two million barrels of oil – have skyrocketed. TradeWinds reported a freight deal in late February for a Middle East to China shipment at over $425,000 per day, with discussions of even larger deals reaching $700,000 per day.
India’s exposure to disruptions in the Bab al-Mandab is comparatively lower than that of some other nations, with 40 to 50 percent of its crude oil imports already flowing through the Strait of Hormuz. However, Tehran’s existing pressure on the Hormuz Strait has already impacted Indian imports, prompting the government to diversify its sources, increasing the number of suppliers from 27 to 41, and resuming purchases from Russia.
While the Hormuz Strait remains the primary chokepoint for global oil trade, accounting for 20 to 25 percent of daily shipments, efforts to mitigate potential disruptions have focused on utilizing pipelines to transport crude from refineries on the eastern side of the Arabian Peninsula to loading facilities on the western side, such as Yanbu in Saudi Arabia. Approximately 4.6 million barrels of Saudi crude were loaded at Yanbu daily over the past two weeks, according to CNN, though this represents a small fraction of the 20 million barrels that typically transit the Hormuz Strait daily.
The potential loss of even this 4.6 million barrels, however, could significantly impact global prices. Brent crude has already surpassed $110 per barrel, leading to fuel price increases in Europe and the United States. India’s government recently cut federal excise duties on heavily subsidized petroleum products in an attempt to shield oil marketing companies from losses, suggesting growing concern in Delhi.
The Houthis’ entry into the conflict complicates the pipeline solution and reinforces Iran’s ability to control Gulf oil exports. Artem Abramov, head of oil and natural gas research at Rystad Energy, told CNN that combined pressure on the Bab al-Mandab and Hormuz straits makes it “very likely” that Brent crude will surge past $150 a barrel in the coming months. As former U.S. Diplomat Nabeel Khoury told Al Jazeera, even limited Houthi attacks on commercial vessels could effectively halt all shipping through the Red Sea.
Beyond crude oil, the Bab al-Mandab Strait also handles 15 to 20 percent of global container traffic, including dry bulk cargo such as machinery, food, and manufactured goods. Rerouting this traffic around Africa increases costs and logistical challenges for manufacturers, potentially leading to supply chain disruptions and inflationary pressures, particularly for lower-income populations in countries like India.
