Closure Upon Closure: The Potential Impact of Houthi Threats to Saudi Shipping at Bab al-Mandeb

The events of 2026 have placed global energy markets before an unprecedented test of their resilience. When the effective closure of the Strait of Hormuz in February removed roughly 13 million barrels per day (mb/d) from available supply, Saudi Arabia redirected most of its exports westward to the Red Sea — only to find that outlet itself imperiled when, on 20 July, the Houthis threatened a naval blockade of the Bab al-Mandeb strait aimed squarely at Saudi shipping. For the first time in its modern history, the Kingdom's oil found itself exposed between the two maritime corridors it straddles, and the question “What if navigation through Bab al-Mandeb is severed?” shifted from a theoretical exercise to an operational probability. The answer, however, is not a single figure: it hinges on the scale of the shortfall, the nature of the cargo held back, and the market's capacity to reroute it.

This analysis therefore sets out to quantify the impact of a Bab al-Mandeb closure across three graduated halt scenarios; to unpack the mechanism by which the shock travels from cargo entrapment to a price spike; to trace its non-price consequences for refined products, aviation, and maritime shipping; and to arrive at the fiscal paradox that leaves the gravest harm to Saudi Arabia latent in the intermediate scenario rather than the full halt.

The effective closure of the Strait of Hormuz in February 2026 pushed Saudi Arabia to shift the bulk of its oil exports from the port of Ras Tanura on the Arabian Gulf in the east to the port of Yanbu on the Red Sea in the west. From Yanbu, crude moves in two opposing directions: northward through the Suez Canal and the SUMED pipeline toward European markets, at roughly 1.45 mb/d, and southward through Bab al-Mandeb toward Asian markets, at roughly 3.1 mb/d of Saudi crude and refined products — the largest single share of the nearly five million barrels that transit the strait southbound each day. Herein lies the source of danger: the southbound volumes through Bab al-Mandeb are the ones now at risk of failing to reach their Asian destination, whereas the northern outlet to Europe remains viable so long as the Suez route stays open. Should the strait be effectively closed, the Kingdom would be left with only a forced alternative for reaching Asian buyers — routing crude through Suez into the Mediterranean, then out across the Atlantic and around the Cape of Good Hope, arriving some 22 to 25 days late. The magnitude of the price shock is therefore determined almost entirely by the gap between what can be entrapped and what can be rerouted.

On this basis, the model posits three graduated supply-halt scenarios: a quarter halt, a half halt, and a full halt. The price response across them is markedly non-linear and follows no fixed pattern; the market can absorb a “quarter halt” with relative ease thanks to the northern route’s capacity to carry it, yet it cannot absorb the shock of a “full halt” at all. The essential reason is that OPEC’s spare production capacity — the safety valve that cushioned the historic oil crises of 1973, 1979, and 1990 — is now itself imperiled, threatening to strip markets of their customary buffer. Moreover, any partial halt would not fall on cargoes at random; it would be a “Saudi-first” halt, since the Houthi threats target specifically vessels flying the Saudi flag or bound for the Kingdom, placing the burden of the first two scenarios (the quarter and half halts) almost entirely on Saudi Arabia.

This mechanism translates into explicit numbers. From a baseline of 110 dollars per barrel of Brent crude, the price peaks between the second and eighth weeks at 120 dollars in the most optimistic scenario, 145 dollars in the intermediate case, and 229 dollars in the most pessimistic, before settling at a lower structural plateau once rerouting is complete — yet remaining above baseline by between 6 and 43%.

A robustness check confirms that the model’s estimates lean conservative rather than alarmist. Measuring each shock as a share of lost global supply and comparing it against historic oil shocks, the full-halt scenario remains milder than the historical norm: the 1973 embargo drove prices up by 285% on a loss of 7.5% of global supply, whereas the present full-halt shortfall of 5.5% is estimated to lift prices by only 108% at their peak. One decisive factor, however, complicates the picture in the opposite direction: in earlier crises markets always held surplus capacity that could be pumped to offset the shortfall quickly, and that cushion is entirely absent today — which is precisely what will render prices, even after the peak subsides, stubbornly resistant to any decline.

This impact unfolds across four distinct phases. In the first 14 days, traffic halts physically and prices run ahead of the physical balance, driven by market panic and position-covering. The material gap then peaks between days 15 and 45, as inventories are drawn down before the first Cape-of-Good-Hope cargoes arrive. Those cargoes begin to land and the northward rerouting is completed between days 46 and 90, easing prices partially without returning them to baseline. Finally, from the fourth month onward, the market settles at the structural loss alone — the residue of higher freight costs under lengthened voyages.

The repercussions of a closure would not be confined to higher prices; they would extend to a genuine and acute shortfall in refined petroleum products, one for which substitutes are exceedingly hard to find. Bab al-Mandeb sees roughly 2.65 mb/d of these products transit in both directions, and when part of that supply is cut, the price mechanism alone will not suffice to fill the void. This is because certain destinations along the Red Sea itself — such as Port Sudan and the ports of Yemen’s coast — may become entirely unreachable from the south. Furthermore, since the Saudi ports on the Red Sea are themselves principal destinations, vessels laden with cargo bound for them would be barred from transit. Products directed to these ports would thus fall outside any prospect of recovery, turning the crisis from a mere problem of higher prices into one of comprehensive, genuine supply disruption.

Jet fuel tops the list of refined products most exposed to the crisis, as Europe relies on northbound shipments through Bab al-Mandeb for around 62% of its imports of this fuel. It is a particularly difficult product to replace given its stringent technical specifications, and refineries can raise its output only at the expense of diesel. Because reserve stocks at European airports cover only 8 to 14 days of consumption, a supply shortage would become a tangible reality before it registered in prices: Mediterranean-basin airports would begin rationing fuel by around the twelfth day, followed by northwest European airports by the twentieth. Under the full-halt scenario, 57% of these European imports would be severed entirely for a period of 6 to 8 weeks.

This severe supply squeeze naturally rebounds sharply on price levels. Whereas the baseline price of a tonne of jet fuel stands at roughly 1,043 dollars, it would surge at the peak of a full-halt crisis to as much as 2,398 dollars — more than a doubling — and the cost would not recede easily, remaining elevated even after markets reached their plateau.

These punishing costs far exceed the aviation sector’s capacity to absorb them. Under the full-halt scenario, the global jet-fuel bill would rise by roughly 182 billion dollars annually — a sum equivalent to nearly five times the industry’s total net profit, estimated at about 38 billion dollars. Airlines could not bear such added expense; they would respond by shrinking their operating networks, translating into a capacity cut of around 11% in the first year, the swift cancellation of long-haul routes with low load factors, and a 40-to-90-percent rise in air-freight costs for high-value cargo. The crisis would thus not merely erode profits but redraw the map of air routes, making network contraction and fewer flights — rather than higher prices alone — the clearest and starkest measure of its depth.

The adverse impact may reach beyond jet fuel to the petrochemicals industry, as Asian markets could suffer a shortage of key feedstocks — such as naphtha and liquefied gas — of between 0.13 and 0.23 mb/d. As a result, plants would be forced to cut cracker-unit run rates by 5 to 12%, in turn driving up prices of vital products such as polypropylene and polyethylene by 25 to 45%. On the Saudi side, the Kingdom’s polymer exports — worth close to 7.5 billion dollars annually — would lose their principal outlet to Asian markets, producing a large domestic supply glut that would become an added economic and operational burden weighing on Aramco and SABIC.

The blockade would fundamentally alter the nature of the challenges facing the port of Yanbu. Previously, the constraint lay in berth capacity: pipelines pumped crude faster than the port could load it onto vessels. Under a blockade, the equation inverts, and the binding constraint becomes the market itself — the berths stand ready and available, but the markets and destinations to which shipments could be sent are absent. This is a dangerous qualitative shift; while a berth shortage can be overcome through expansion and construction, there is no engineering or infrastructure fix for the loss of markets. As a result, Yanbu’s storage tanks would fill with extraordinary speed within a brief window of no more than 5 to 8 days. At that point, the Kingdom would have no option but the decisive step of cutting oil output directly at the wellhead.

Here emerges one of the most striking paradoxes the model reveals: the fiscal impact on Saudi Arabia does not follow a direct or expected upward path. The largest annual financial loss occurs not under the worst and most severe closure, but within the intermediate scenario, reaching some 22 billion dollars. By contrast, this loss shrinks strikingly and unexpectedly under the full-halt scenario, falling to roughly 4 billion dollars. The economic explanation for this paradox is that a partial blockade curtails the volumes sold and exported without pushing world prices up enough to offset the shortfall, whereas a comprehensive blockade triggers so vast a price surge that it covers most of the losses arising from the halted sales.

This figure, however, in no way implies that the full-halt scenario would be “lighter” in damage or severity, for the estimate measures only the revenue from crude-oil sales and does not reflect other grievous economic consequences: the expected collapse of foreign direct investment by between 60 and 70%; the paralysis that would grip the import sector through the port of Jeddah, on which the Kingdom relies for 65% of its total imports; and the damage that price discounts could inflict on the stability of long-term commercial ties with buyers in Asian markets, who represent the principal destination for around 70% of Saudi crude exports.
In sum, the Bab al-Mandeb crisis reaffirms a fundamental rule of energy markets: a halt in the supply of a barrel does not necessarily mean that barrel is lost, yet the absence of “spare production capacity” turns that halt into a violent shock devoid of any safety net to absorb it. The gravest analytical lesson here is that a partial halt follows a “Saudi-first” trajectory; the optimistic and intermediate closure scenarios fall almost entirely on the Kingdom, meaning it would bear the brunt of the burden alone before the crisis’s repercussions extended to global markets.
Looking ahead to the most probable trajectory, two specific quantitative estimates can be offered. First, sustaining a comprehensive blockade for twelve months would settle Brent crude at a level near 157 dollars per barrel — a rise of roughly 43% above the customary baseline — a price level sufficient to generate a refined-product shortfall of close to 62 million tonnes annually. Second, the most dangerous variable, warranting close daily monitoring, is the northern route (the Suez Canal and the SUMED pipeline); were it to close — under an extreme, hard-to-realize scenario — Brent would leap to touch 243 dollars per barrel at peak before settling at 192 dollars, roughly double the economic impact of closing Bab al-Mandeb alone. Between these two markers, the equation of crisis management comes clearly into focus: every million barrels successfully rerouted northward moves the market one step back from the brink, while every day the strikes draw nearer to the port of Yanbu pushes it one step closer to the edge.

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