The conflict is expanding. And with it, the systemic risk for global energy markets reaches a dimension that no pricing model had yet fully incorporated.
The Houthis have officially entered the arena. Not as supporting actors, but as players capable of opening a second maritime front of primary strategic importance. Bab el-Mandeb, the strait that closes the Red Sea to the south, is now under pressure, just as the Strait of Hormuz is to the north of the Persian Gulf.
Two simultaneously exposed bottlenecks: this is a configuration unprecedented in the history of the modern oil market.
The geometry of risk has radically changed. Until yesterday, the exit strategy envisaged that a disruption at Hormuz could be partially compensated by alternative routes through the Red Sea. Today that safety valve is gone. Saudi Arabia had already massively redirected its flows: Yanbu, the terminal on the Red Sea, has seen transit rise from 750 thousand barrels/day to 4.3 million, with another 500 thousand b/d of capacity available. Almost 50 VLCCs are currently concentrated waiting for loading in that stretch of water. A visible, concentrated, vulnerable fleet.
The number that counts is 5 million barrels per day. It is Saudi Arabia’s bypass capacity relative to the Strait of Hormuz that transits from Yanbu to Asian markets.
If the Houthis were to strike this infrastructure, the Yanbu terminal, the East-West pipeline that flows into it, or simply make Bab el-Mandeb unnavigable, that capacity would evaporate producing an additional premium of at least 20 dollars per barrel. An estimate that, in light of the ongoing escalation, no longer appears as a tail risk but as a concrete working hypothesis.
Alternatives exist, but they are weak. The SUMED system, which connects Ain Sukhna on the Red Sea to Sidi Kerir on the Mediterranean, offers at most 2.8 million b/d of theoretical capacity, normally operating at about one third.
The Suez Canal is another option, but VLCCs can transit there only partially loaded: over 130 additional trips would be needed to move the 4.8 million b/d Saudi volumes normally destined for Asia through Bab el-Mandeb. Transit times to Asian markets would lengthen by 40 days. The transport market, already under stress, would explode.
The real question is not the technical capacity of the Houthis to carry out attacks, but their political choice: immediate escalation against Saudi infrastructure, or use of this leverage as a negotiating tool in the evolution of the conflict? Every passing day, every raid on Iranian infrastructure, every widening of GCC involvement, shifts the needle towards the first option.
In conclusion, the market is pricing the bottleneck at Hormuz. It is not yet pricing a simultaneous expansion to Bab el-Mandeb. This is the gap. Which markets, as always, will fill.
