Red Sea Tensions Push Oil Prices Over $100 Amid Shipping Bottleneck

Oil shipments to Asia could take about a month longer if escalating fighting around the Red Sea forces more tankers to avoid one of the world's most important maritime chokepoints, Bab Al Mandab Strait.

The threat comes as Iran-backed Houthi militants tighten their grip around the strait, which connects the Red Sea with the Gulf of Aden and the Indian Ocean. According to Yemeni government sources cited by CNN, the Houthis have captured the port city of Mocha and strategic Perim Island in the middle of the chokepoint.

The Strait of Hormuz has been severely restricted due to the US-Iran war, making the Red Sea an increasingly important alternative route for getting Middle East crude to global markets. However, if tankers cannot safely travel south through Bab Al Mandab, cargoes bound for Asia face an extraordinary detour.

Ships may have to travel north through the Suez Canal into the Mediterranean, sail down the western coast of Africa, round the continent and then cross the Indian Ocean towards Asian customers. This journey could add around a month to transit times while increasing spending on fuel, freight, insurance, and crews.