Two Middle East Chokepoints Fuel Global Oil Market Uncertainty

The global oil trade is facing a new reality as two Middle Eastern chokepoints become increasingly vulnerable to disruption.

Standard Chartered's commodity research team has identified this shift, characterizing it as a 'two-chokepoint problem' that requires traders and analysts to model scenarios involving simultaneous operational constraints at both the Strait of Hormuz and the Bab el-Mandeb Strait.

The Strait of Hormuz is particularly critical due to its narrow width and high volume of oil traffic. Approximately one-fifth of the world's oil supply transits this waterway daily, alongside a substantial share of global LNG volumes.

A disruption scenario could lead to a significant supply gap, dwarfing the pre-existing cushion of roughly 2 million barrels per day. The current situation is distinct from previous Hormuz tension episodes due to military activity in the broader Persian Gulf theatre, which has already altered tanker behavior and led to a tightening of effective transit capacity.

The Bab el-Mandeb Strait, meanwhile, has become a primary chokepoint almost overnight due to Saudi Arabia's contingency planning. Approximately 70% to 75% of Saudi crude exports are now being routed through the East-West pipeline, resulting in loadings at Yanbu climbing to approximately 4.5 million barrels per day.

The Houthi escalation has further complicated the situation, imposing a targeted maritime blockade against Saudi-linked shipping and adding another layer of disruption across multiple supply corridors.