Iran's Proxy War: A Threat to Global Oil Markets
Tehran has been using its proxies to put pressure on the global economy ahead of the American midterm elections, and one such card is Bab Al-Mandab Strait.
The Houthis have launched a new offensive in Yemen, targeting the strategic waterway, which would severely impact Saudi Arabia's Red Sea exports if closed. This move is seen as an attempt to put pressure on oil prices and U.S. midterms.
Tehran denies giving orders to its proxies but deniability is not credible given the Houthis' military and logistical support from Iran.
The Strait of Hormuz was previously used by Iran to bring the world economy to its knees, but it failed to have a significant impact. The closure of Bab Al-Mandab would be a more severe blow, as Saudi Arabia's Red Sea exports amount to around 20 million barrels per day.
A key factor in managing oil price increases has been the decline in Chinese demand for crude oil and petroleum-related products, which dropped by approximately 3.6 million barrels per day.