Just as the world was worried about the Strait of Hormuz, another hot spot in the Middle East is now burning again. The ceasefire that has lasted since 2022 in Yemen is now collapsing, and this time it brings a new risk to the world's equally important oil route.
Chronology of the Rapidly Erupting Battle
It all started when the Houthi group reopened Sanaa Airport to receive direct flights from Iran, bringing home a delegation attending the funeral of Ayatollah Ali Khamenei. The Yemeni government, supported by Saudi Arabia, considered this a violation of air sovereignty.
Last Monday, Saudi coalition fighter jets continued to bomb the runway of Sanaa Airport to block Iranian planes from landing. The Houthis immediately announced the end of the ceasefire, and that same night launched ballistic missiles and drones towards Abha Airport in Saudi Arabia.
The Saudi air defense system successfully intercepted the threat, no casualties were reported. But the impact has been drastic enough, all airports in Yemen are now closed until further notice.
Why the Bab al-Mandab Strait is So Important
Many may not realize that Yemen actually controls the Bab al-Mandab Strait, a strategic maritime route that connects the Red Sea with the Gulf of Aden. More than 3.5 to 4 million barrels of crude oil and world trade pass through this strait every day, heading to the Suez Canal.
Saudi Arabia itself fears that its East-West Pipeline, which was built specifically to avoid the Strait of Hormuz, will now also be affected if tensions in the Bab al-Mandab spread. Ironically, the alternative route built to reduce risk is now itself exposed to new risks.
This conflict is also not a new story. Saudi Arabia has been involved in Yemen since 2015, starting with Operation Decisive Storm, due to concerns about Iranian influence through the Houthis who could complete what is called the “Shiite Crescent” to surround Saudi Arabia.
The Impact on Oil
When two of the world’s critical oil routes, Hormuz and Bab al-Mandab, are both at risk simultaneously, the pressure on global oil prices is potentially greater than if only one route is affected.
Merchant ships trying to avoid Hormuz by choosing the Red Sea route now have to face new risks in Bab al-Mandab. This means that shipping insurance costs and travel times can potentially increase simultaneously on both routes.
Key Takeaways
Yemen's ceasefire since 2022 ended after air battles erupted between the Saudi-led coalition and the Houthis on July 13-14, 2026.
The main reason was an Iranian flight landing in Sanaa without the permission of the Saudi-backed Yemeni government.
The Yemeni-controlled Bab al-Mandab Strait channels 3.5 to 4 million barrels of oil per day, making this conflict also a threat to world oil routes.
Saudi's alternative route, the East-West Pipeline, is also at risk of being affected if tensions continue.
Simultaneous risks in Hormuz and Bab al-Mandab have the potential to put pressure on oil prices and the Ringgit through higher energy costs.
The UN Security Council has urged both sides to remain calm, but as long as the negotiation channel has not truly succeeded, the financial world is expected to continue to monitor Yemen as closely as it has Hormuz.
