Crude oil and oil products flowing through the Bab el-Mandeb Strait, a critical chokepoint at the mouth of the Red Sea, have dropped by more than 50% in the first eight months of 2024.
Chokepoints are narrow sea routes that are crucial for global energy trade. Any disruption in these areas can cause significant delays, increase shipping costs, and drive up global energy prices.
Since attacks by the Yemen-based Houthi militia on commercial vessels in November 2023, many ships have been rerouting to avoid the Bab el-Mandeb Strait. Instead of passing through the narrow strait, ships are choosing longer and more expensive routes around the Cape of Good Hope at the southern tip of Africa.
Oil trade through the Bab el-Mandeb Strait has sharply declined over the past year. The average oil flow in 2024 was 4.0 million barrels per day (b/d), compared to 8.7 million b/d in 2023, according to Vortexa data.
The Bab el-Mandeb Strait, along with the Suez Canal and the SUMED pipeline, serves as a vital passage for oil and gas shipments from the Persian Gulf to Europe and North America. Another key chokepoint, the Strait of Hormuz, saw oil flows average 20.9 million b/d in 2023, accounting for about 20% of global oil consumption. The strait also handles around one-fifth of global liquefied natural gas (LNG) trade.
Despite regional tensions, the Strait of Hormuz remains the most important global chokepoint, with significant volumes of oil passing through it daily. In addition, Iran, which holds the third-largest oil reserves in the world, continues to produce significant quantities of crude oil, despite facing international sanctions.
Meanwhile, Saudi Arabia remains the world’s top crude oil producer and exporter, with an average output of 9.5 million b/d in 2023.
The rising geopolitical risks in the Middle East have also impacted global oil prices. Following an attack on Israel by Iran on October 1, 2024, Brent crude oil prices surged, reaching $81 per barrel by October 7, before settling at $79 per barrel on October 10.
As tensions continue to rise, global oil markets remain sensitive to developments in these key maritime chokepoints.
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