Bab el-Mandeb Crisis Threatens Global Energy Markets with Brent Prices Expected to Surge

Energy markets are facing new challenges due to conflicts in the Middle East. The Bab el-Mandeb Strait, through which approximately 12% of seaborne oil shipments and nearly 8% of global LNG trade transit, is severely restricted due to security concerns.

This has resulted in Saudi Arabia losing one of its most important export corridors, forcing Riyadh to seek alternative solutions. Over 40 countries have participated in an international meeting to establish a maritime defense coalition, with 14 states, including Turkey, Egypt, and Pakistan, supporting the initiative.

The Suez Canal is now the only reliable alternative for Saudi exports, but its limited depth does not allow fully loaded supertankers. Large tankers are forced to offload part of their cargo via the Egyptian SUMED pipeline towards the Mediterranean, resulting in significant delays and increased costs.

For Asian importers, deliveries are delayed by 20 to 30 days, with many cargoes being forced to follow a route around Africa. The crisis is not limited to transport alone; Saudi Aramco has suspended operations at its refinery in Jeddah, reducing the country's production capacity and putting additional pressure on crude oil markets.

The situation is further complicated by problems in oil exports through the Black Sea, where attacks on critical infrastructure have impacted transport via the Caspian Pipeline Consortium. This has resulted in a significant reduction in Kazakhstan's oil production, placing an additional burden on global supply.

Analysts warn that if the situation deteriorates further, oil prices will move to significantly higher levels. In the extreme scenario of a complete halt to navigation in the Strait of Hormuz, Brent could surge into the 130-150 dollars per barrel range.