Global Trade Routes Under Siege: Conflict and Drought Cause Shipping Bottlenecks

Two critical trade routes have been severely impacted by conflict and drought: the Strait of Hormuz and the Bab el-Mandeb Strait. The Strait of Hormuz, which connects Iran to Oman and carries 20% of the world's oil, has been partially closed since early March in response to a US-Israel attack on Iran. Ansar Allah (the Houthis) have also closed the Bab el-Mandeb Strait near their territory in Yemen, affecting Saudi vessels.

Ansar Allah claims that commercial ships not serving Saudi Arabia can still use the strait, but many have chosen to avoid it as they attack Saudi ships. As a result, Saudi oil tankers are taking a longer route around Africa, increasing costs. The Houthis have shown their ability to target Saudi ports on the Red Sea and may escalate further.

The Panama Canal is also experiencing difficulties due to drought, which has reduced the number of ships it can handle each day. Ships must now wait 10 days to transit the canal unless they pay a premium to skip the line. The Rhine River in Europe has reached its lowest levels since records began in 1880, with vessels carrying less cargo to avoid scraping the bottom.