At this point everyone is already aware of the effective closure of the Strait of Hormuz, as well as the resulting price increases. However, the Bab al-Mandab Strait is now also at risk. This creates a situation where both ends the oil shipping route are under pressure at the same time.
If the Bab al-Mandab also closes, that would create a serious bottleneck in the global oil supply chain. Ships would have to reroute around Africa, adding costs, time, and higher insurance. As businesses face higher costs they will pass them onto the consumer. This would drive oil prices up quickly, and with it many other associated costs such as flights and delivery services.
It's not just about Hormuz anymore-if Bab al-Mandab closes as well it could turn a tense situation into a larger economic shock.
Source: https://www.aol.com/articles/key-shipping-route-under-houthi-103733190.html
If current trends continue, the real danger may not come from the physical disruptions themselves, but from how markets react to the fear of them. With both key shipping routes under threat, rising anxiety can drive preemptive decisions—spiking prices, tightening supply expectations, and amplifying volatility—ultimately creating the very economic shocks everyone is trying to avoid.
ReplyDeleteI did my blog post about oil prices in relation to the closure of the strait of Hormuz but didn't read on the Bab al-Mandab strait is also at risk. This would be a major issue if this were to happen. This would affect the economy on many levels.
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