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July 24, 2026

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CNA Explains: With the Houthis’ Red Sea threat, is the world running out of detours?

Analysts warn that a simultaneous disruption of two key waterways – the Bab el-Mandeb Strait and the Strait of Hormuz – would put global supply chains under strain.

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SINGAPORE: When major shipping routes are disrupted, global trade typically adapts by finding alternatives.

That resilience has helped the system absorb shocks from wars, pandemics and geopolitical tensions over the years.

But the Houthis’ latest threat to block the Bab el-Mandeb Strait – a critical chokepoint linking the Red Sea to the Gulf of Aden – is testing those limits.

With tensions also simmering in the Strait of Hormuz, analysts warn that a simultaneous disruption of both waterways would put global trade under strain.

So how much room is left to manoeuvre? And what could this mean for shipping, energy markets and supply chains?

Why are the Houthis targeting the Red Sea?

Yemen’s Houthi rebels said on Monday (Jul 20) that they would impose a maritime blockade on Saudi Arabia, in what they described as retaliation for Riyadh’s actions against Houthi-controlled infrastructure, including airports and ports.

The move to block the Bab el-Mandeb Strait follows a series of escalating attacks, including missile strikes on Saudi Arabia’s Abha International Airport after the airport in Yemen’s rebel-held capital Sanaa was hit.

The Houthis have been fighting a Saudi-backed Yemeni government since 2014. They are aligned with Iran and form part of Tehran’s so-called “Axis of Resistance” that also includes Hamas and Hezbollah.

While the Houthis did not detail how it would enforce the blockade, its past attacks on shipping in the Red Sea – including more than 100 vessels targeted during the Gaza conflict – have already demonstrated its disruptive capability.

Why does the Red Sea matter?

The Bab el-Mandeb Strait, at the southern tip of the Arabian Peninsula, is one of the world’s most important maritime chokepoints.

Around 12 per cent of global trade and roughly a quarter of container traffic pass through it en route to and from the Suez Canal.

It is also a key artery for energy flows, with Saudi Arabia’s Red Sea port of Yanbu crucial for exporting oil, bypassing Iran’s closure of the Strait of Hormuz amid its war with the United States.

Recent data underscores its growing importance. Reuters reported on Tuesday that shipments from Yanbu averaged 4 million barrels per day in recent weeks, up from around 973,000 barrels per day a year earlier.

But that flexibility may now be under threat.

“With recent Houthi threats in the Red Sea, more and more barrels will be halted. The route being used for rerouting is also vulnerable now,” Priyanka Sachdeva, senior market analyst at Philip Nova, told CNA.

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What happens if two key straits are disrupted?

The risk becomes far more severe when viewed alongside tensions in the Strait of Hormuz, which carries about one-fifth of global seaborne oil and liquefied natural gas exports.

A dual disruption would “deliver a one-two punch to global oil supply”, said Vandana Hari, founder and CEO of Vanda Insights, estimating that up to 7 million barrels per day could be affected.

Professor Mark Goh from the National University of Singapore Business School’s department of analytics and operations said such a scenario could reduce the supply of crude oil to places like Asia and Australia by as much as 25 per cent.

“This disruption would then lead to a corresponding sustained increase in oil prices for downstream supply chain industries and users,” he added.

Sachdeva warned that simultaneous disruptions would leave markets with very limited flexibility to reroute cargo, raising the risk of broader inflation through higher energy, transport and food costs.

“While we are nowhere near that scenario today, a prolonged shutdown of major export routes could create operational challenges that extend well beyond higher oil prices,” she told CNA.

How has shipping been affected?

Even without a full blockade, the threat alone is altering shipping patterns. Shipping delays are now “a given”, said Prof Goh.

On Tuesday, three oil tankers loaded with Saudi crude bound for China and India made U-turns in the Red Sea and headed towards the Suez Canal instead of the Bab el-Mandeb Strait, Reuters reported.

Apart from the Suez Canal, refiners are exploring longer routes via Egypt’s SUMED pipeline and, in some cases, around the Cape of Good Hope.

But these workarounds come at a cost.

Rerouting can add weeks to journeys and significantly increase fuel, insurance and freight expenses.

“There is no such thing as a free detour in shipping,” Sachdeva said. “Higher freight rates, more expensive insurance and longer delivery times ultimately raise the overall cost of transporting energy, and this is on top of the surging price of an oil barrel.”

Capacity constraints are also emerging.

The Suez Canal cannot accommodate fully loaded Very Large Crude Carriers (VLCCs), requiring cargo transfers that add time and cost. Shippers often lighten a vessel’s load on the Red Sea side before entering the canal by moving a portion of the oil on Egypt’s SUMED pipeline. The ship picks up the oil on the Mediterranean side after it passes the Suez Canal with a lighter load.

Why can’t ships simply take another route?

In theory, ships can bypass the Red Sea entirely by sailing around Africa via the Cape of Good Hope.

In practice, this is a fallback – not a solution.

“Rerouting through the Cape of Good Hope is a second-best solution as it will not be favourable to shippers in terms of the increase in nautical miles that needs to be covered”, Prof Goh said.

The route is significantly longer, more expensive and operationally demanding. It also ties up vessels for extended periods, reducing the number of trips they can make, effectively tightening global shipping supply.

“This was exactly the key reason why the Suez Canal was built in the first place, (to) create a direct shipping route between the Atlantic Ocean and the Indian Ocean, without having to navigate the more treacherous Cape of Good Hope,” Prof Goh said.

He added that the shipping sector would have to carry a premium either way for using the Suez Canal or the Cape of Good Hope.

Is the world running out of options?

Analysts are divided, but the margin for flexibility is clearly shrinking.

For Hari from Vanda Insights, the view is stark. “The world is running out of options to mitigate a prolonged closure of Hormuz, let alone a simultaneous blockade of Bab el-Mandeb,” she told CNA.

Sachdeva from Philip Nova was more cautious, saying alternatives still exist – but they are becoming less efficient and more costly.

The Cape of Good Hope remains the main fallback route, but it can only cushion the impact, not absorb it.

“The more chokepoints come under pressure at the same time, the less flexibility the global trading system has,” Sachdeva added.

What could this mean for the global economy?

The most immediate impact would likely be higher oil prices.

Hari warned that crude could spike towards US$150 per barrel, while Sachdeva sees US$100 as a nearer-term risk.

“With commercial and emergency oil stockpiles already thinned out in the first wave of the US-Iran war, crude prices can be expected to spike towards US$150, at least until it brings about a big enough demand destruction,” Hari said.

But the effects extend well beyond energy.

The Red Sea is a major artery for global trade, carrying everything from manufactured goods to agricultural commodities. Prolonged disruption could push up costs for food, fertilisers and industrial materials, raising broader inflation risks.

“The Red Sea is one of the world’s busiest trade corridors, so any prolonged disruption affects global supply chains as a whole,” Sachdeva said.

“What concerns me most is the combined effect of rising oil prices and more expensive maritime transport,” she added.

“Energy becomes costlier, shipping becomes more expensive, and businesses face higher input costs across multiple sectors. That creates a much broader inflationary pressure than simply higher fuel prices.”

For companies reliant on just-in-time supply chains, the implications are particularly acute.

“Any industry actively practising a JIT (just in time) strategy or traditionally dependent on materials supply from the Arabian Gulf states would need to seriously rethink their strategy,” Prof Goh said, warning of “higher costs, slower arrival of goods and more supply-side uncertainty” in the months ahead.

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Source: CNA/fh(gs)

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