Options dwindle for getting oil out of Middle East if Bab-el-Mandeb Strait closes
Houthi attacks at Bab-el-Mandeb Strait have raised fears they may attack ships.
The effective closure of the Strait of Hormuz during the war with Iran has choked global oil supply and exports through alternative routes still leave the world supply short by about 13 million barrels per day – a gap with no clear replacement.
The Bab-el-Mandeb Strait on the western side of the Arabian Peninsula, between the Red Sea and the Gulf of Aden, has been one of several partial workarounds to the closure of the Strait of Hormuz.
Houthi attacks over the weekend in the Red Sea and Gulf of Aden have raised fears from some market analysts that they may attack ships in this waterway as they have in past years.
In 2024, the Bab el-Mandeb Strait carried about 4 million barrels of oil per day — roughly 5% of global seaborne oil trade — along with a major share of container shipping, and sits along Yemen’s coast, where Iran-backed Houthi forces operate.
JP Morgan analysts say problems with the passage of oil through the Bab-el-Mandeb Strait could add $20 a barrel to oil prices.
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The Strait of Hormuz used to ship an average of 20 million barrels of oil per day, according to the U.S. Energy Information Administration (EIA). About 7 million barrels per day of that loss is being made up through other means, like the Bab-el-Mandeb Strait, Fujairah, in the United Arab Emirates and the release of strategic reserves, according to Kpler data.
That still leaves the world short of about 13 million barrels of oil per day that once came through the Strait of Hormuz, according to Kpler's lead oil analyst Matt Smith.
Most of that oil is bound for ports in Asia, per Kpler data.
Two of the most important alternatives to the Strait of Hormuz are Saudi Arabia's East-West pipeline, which terminates at the Red Sea port of Yanbu, and the United Arab Emirates' ADCOP pipeline, which feeds the export terminal at Fujairah.
Saudi Arabia’s East-West pipeline has a capacity of roughly 7 million barrels per day – much of that can be exported through the port of Yanbu, on the Red Sea, and the Bab-el-Mandeb Strait.
Oil flows through Yanbu are up to 4.6 million barrels per day as of last week, nearly double the average of 2.5 million barrels per day in early March, according to Kpler data.
“At Yanbu, exports have historically averaged around 750,000 barrels per day of crude oil” prior to the war, noted Smith.
The Fujairah terminal has also seen a sharp increase. After handling about 2.25 million barrels per day earlier in March, flows climbed to roughly 3.2 million barrels per day last week before showing signs of volatility tied to regional attacks, according to Smith.
If both Yanbu and Fujairah, which lies past the Strait of Hormuz, were compromised, moving oil out of the Arabian Peninsula would become "virtually impossible," according to Smith.
Oil experts convey a bottom line: beyond those routes, there are no meaningful alternatives — there is no equitable backup plan to the Strait of Hormuz; these alternatives are the limited options left.
On Feb. 28, the United States and Israel launched massive strikes on Iran in an operation targeting military and government sites. Ayatollah Ali Khamenei was among those killed in Tehran in the initial strikes.
Iran retaliated against the strikes with missile and drone attacks targeting Israel, regional U.S. bases and multiple Gulf nations, primarily targeting U.S. interests in the region. Its response also effectively closed the Strait of Hormuz.