The Middle East conflict spreads! The Houthi forces "join the fight," and is the "second-largest energy corridor," the Strait of Mandeb, also at risk?

Ask AI · Will the Risk Escalation in the Strait of Mandeb Trigger a Global Energy Crisis?

The Houthis have officially entered the Iran conflict, and the global energy market is facing fresh shockwaves.

According to Xinhua News Agency, on the 28th, Yemen’s Houthi forces, in a statement released early that morning via the Masirah TV station they control, said that the group launched a ballistic missile at Israel that day, and the action would continue until the invasion stops.

This move means the war is opening a new front, and the Strait of Mandeb at the southern end of the Red Sea is once again exposed to risk.

Saudi Arabia transports crude oil from the East-West Pipeline to the Yanbu port, and then ships it out via the Strait of Mandeb. This is the core alternative for crude oil transport after the Strait of Hormuz was obstructed. Since March, the crude oil loading at Yanbu port has risen to around 3.4 million barrels per day on average. Since this week, some daily volumes have exceeded 5 million barrels, setting a historical record.

Meanwhile, Iran on Saturday carried out retaliatory strikes against Gulf Arab countries and Israel. A fire broke out in Abu Dhabi’s industrial area in the UAE; Kuwait airport radar systems were heavily damaged by drones; and Oman’s Salalah port was forced to suspend operations.

Expectations of a ceasefire in the near term have already cooled in the energy market. Brent crude closed on Friday above $115 per barrel, up about 60% cumulatively since the outbreak of hostilities.

The Houthis Enter the Scene, and Risk in the Strait of Mandeb Jumps Sharply

The Houthis’ involvement adds a highly sensitive energy-geography variable to this conflict. The Strait of Mandeb is the throat route from the Red Sea to the Gulf of Aden, ranking alongside the Strait of Hormuz as two of the world’s most critical energy shipping corridors.

After the Israel-Hamas war broke out in 2023, the Houthis’ missile and drone attacks have effectively blocked most Western shipping companies’ passage through this waterway, and there is now a risk that this situation could further deteriorate.

What is worth noting is that Saudi Arabia is currently sending its oil exports to the outside world by routing them through the Yanbu port to bypass the Strait of Hormuz, which is now nearly shut—and this port is completely within range of Houthi missiles.

Bloomberg previously reported that the United States has issued warnings about the threat posed by Houthi attacks near the Strait of Mandeb, and this potential risk has continued to rise as the situation escalates.

This means the alternative export routes Saudi Arabia activated in response to the closure of the Strait of Hormuz are also facing a direct threat. If Yanbu port is hit, another important lifeline supporting global crude oil supply will be shaken as well, and the “buffer solution” the market is counting on may fail.

Hormuz Remains in Limbo, and Negotiation Progress Lags

The Strait of Hormuz has been nearly shut since February 28, when the U.S.-Israel coalition launched strikes against Iran. About one-fifth of the world’s oil and liquefied natural gas are normally transported through this waterway.

This week, Trump pushed forward negotiations, extending the final deadline for reopening the Strait of Hormuz to Tehran to April 6, and putting forward a proposal containing 15 items. The core conditions include:

Iran dismantles nuclear facilities and reduces its missile stockpiles in exchange for easing sanctions. Iran rejected this plan, insisting on demands for war reparations, recognition of some form of control over the Strait of Hormuz, and assurances that the U.S. and Israel will no longer attack Iran.

According to media reports citing informed sources, on Friday U.S. Secretary of State Marco Rubio said in a call with colleagues from the Group of Seven that this war will end in weeks rather than months.

Trump’s special envoy Steve Witkoff also said that a meeting between the U.S. and Iran could take place “this week,” with Pakistan seen as the most likely venue.

The foreign ministers of Saudi Arabia, Turkey, and Egypt are expected to visit Islamabad from March 29 to 30 to consult on efforts to cool down the region.

Rumors of a Ground Invasion Heat Up, and Market Sentiment Stays Under Pressure

While Trump extended the final deadline to April 6, he also bought more time to assemble forces in the region for the United States, and speculation about a ground deployment has accordingly intensified.

According to media reports citing military analysts, if Trump decides to use ground forces, he may choose to capture Kharg Island, which is smaller in the middle area of the Persian Gulf—almost all of Iran’s oil exports are shipped from this island.

The U.S. may also seek to take control of the Iranian side of the Strait of Hormuz to forcibly reopen this route that is crucial for oil-and-gas and container ships, or deploy special forces to transfer about 440 kilograms of highly enriched uranium from Iran.

Financial markets have already responded to the ongoing escalation. U.S. stocks fell on Friday to a level not seen in more than seven months, and yields on the 10-year U.S. Treasury note rose to nearly the highest level since July. Fuel shortages continue to worsen in multiple places worldwide; the Philippines has announced an energy emergency, and concerns in the economics community about stagflation risk are also rising.