As oil hits $100 a barrel, what to know about the Bab el-Mandeb strait
As of 11 a.m. eastern on Thursday, Brent crude prices were around US$100.60 per barrel as conflict in the Red Sea drove oil tanker traffic in the crucial Bab el-Mandeb strait down.
The price of Brent crude, the global benchmark price for oil, breached US$100 a barrel on Thursday as the U.S. war on Iran dragged on for nearly five months.
As of 11 am ET, Brent Crude prices were around US$100.60 per barrel, as conflict in the Red Sea between Saudi Arabia and the Houthi rebels in Yemen drove oil tanker traffic in the crucial Bab el-Mandeb strait down.
This came as the Strait of Hormuz remained closed to vessels as the U.S. and Iran intensify their strikes.
What is the Bab el-Mandeb Strait?
The Bab el-Mandeb Strait is a sea route or a trade “chokepoint” between the Horn of Africa and the Middle East, connecting the Red Sea to the Gulf of Aden and Arabian Sea
It is one of the two routes connecting the Red Sea to the wider ocean, along with the Suez Canal which connects it to the Mediterranean Sea.
At its narrowest point, the strait is 18 miles or 29 kms wide with a shipping lane that is around two miles of 3.2 kms wide.
The Bab el-Mandeb strait is flanked by Eritrea and Djibouti on one side and Yemen on the other.
A ‘conduit’ for trade
“It’s a conduit that historically was used for trade between the Indian Ocean and Europe and has been kind of a relevant piece of geography for thousands of years for international trade,” said Joseph Calnan, vice president of energy at the Canadian Global Affairs Institute.
In 2018, an estimated 6.2 million barrels per day of crude oil, condensate, and refined petroleum products flowed through the Bab el-Mandeb Strait toward Europe, the United States, and Asia, an increase from 5.1 million in 2014, according to the U.S. Energy Information Administration.
In 2017, the strait accounted for nine per cent of the world’s total seaborne petroleum trade.
A backup route?
After the closure of the Strait of Hormuz during the Iran war, Saudi Arabia rerouted around 70 per cent of its crude oil exports to the Red Sea port of Yanbu. Ships bound for Europe typically transit north via the Suez Canal, while those heading to Asian markets go south through the Bab el-Mandeb.
Shipments from Yanbu averaged four million barrels per day in recent weeks according to data from Kpler and Signal Ocean, up from around 973,000 barrels per day a year earlier.
“I would classify the east-west pipeline in Saudi Arabia and the port of Yanbu as the real relief point (from the blocking of the Strait of Hormuz),” Calnan said.
“The number of tankers transiting the Bab el-Mandeb Strait increased dramatically ever since the port of Yanbu and the Saudi Arabia East-West pipeline became one of the most vital conduits for energy in the world,” he added.
Houthis open new front
On Thursday, the Houthis of Yemen struck two Saudi oil tankers in the strait in support of Iran. This has caused traffic in the Bab el-Mandeb Strait to slow significantly.
Goldman Sachs said in a note earlier this week that the price of Brent crude might exceed US$120 a barrel in the fourth quarter of the year and average $100 next year if the Strait of Hormuz remains disrupted through 2027, with further upside if the Bab el-Mandeb Strait and Suez Canal also suffer persistent disruption.
The Houthis emerged as a military, political and religious movement in north Yemen in the 1990s, fighting guerrilla wars against the government in Sanaa.
They have been in a civil war against the Saudi-backed, internationally recognized, government for more than a decade and have attacked Gulf neighbors with missiles and drones.
Their actions became a concern for the global shipping industry in 2023, when they attacked ships in the Red Sea in response to Israel’s invasion of Gaza.
“They demonstrated the capability to make the Bab el-Mandeb Strait very dangerous for shipping, and despite efforts from the Biden administration as well as European allies, shippers broadly just were avoiding the Bab el- Mandeb strait for the time that the Houthis were shutting it down,” Calnan said.
While the strait is not currently closed, the recent attacks have led shippers to reposition their routes, he added.
Iran and the U.S. have meanwhile stepped up their attacks as they vie for control of the strait, through which a fifth of the world’s oil and gas transited in peacetime, setting off a scramble for alternative routes.
As the U.S. carried out a 12th night of strikes across Iran, U.S. President Donald Trump threatened “major military punishment” against the Houthis if their attacks on ships continue.
Higher shipping costs
This has caused some Asian refineries, such as South Korea’s Hyundai Oilbank, to seek alternative routes. On Monday, Reuters reported that the South Korean refiner had already started to look an oil carrier to load oil at Yanbu port and transit via the Suez Canal or Egypt’s SUMED pipeline.
If ships bound for Asia do not transit via the Bab el-Mandeb strait, they would be forced to go through the Suez Canal or the SUMED pipeline. This would mean they’d have to go all the way around Africa’s southern tip to get to Asia, dramatically increasing transit time and shipping costs.
“Once you get into the Mediterranean, you can go the long way, all the way around Africa and still get to where it needs to go. It’s much more expensive,” Calnan said.
“There are higher fuel costs. These tankers take up a hell of a lot of heavy fuel oil to get to where they need to go and also the cost of keeping the crew on board, the cost of just generally running the ship is higher,” he said, adding that all of these factors contribute to higher oil prices.
Could things get worse?
The oil supply from the Middle East will not return to pre-war levels this year, global trade intelligence firm Kpler said in a note Thursday.
But if the Houthis are able to target the port of Yanbu in Saudi Arabia, it could hit global oil supply further, Calnan said.
So far, however, their reach seems limited, he said.
“They have not demonstrated yet their ability to strike the port of Yanbu, or to necessarily put all the tankers that are going to the port of Yanbu at risk. Especially if those tankers are using the Suez, rather than the Bab el-Mandeb Strait,” Calnan said.
However, if the war drags on and the Bab el-Mandeb strait is closed, it could cause sustained pressure over a longer time period, he added.
“It’s just a question of how much the global shipping industry is able to absorb this,” Calnan said.
What does it mean for Canada?
Gas prices in Canada hit a monthly high on Thursday, with gas costing an average of $1.77 per litre across the country.
This was up from $1.70 a week ago, $1.60 from the same time a month ago and $1.33 from the same time a year ago.
But the crisis is also an opportunity for Canada to diversify its customer base, Calnan said.
“There is an opportunity for Canada to make the case to these to these East Asian, South East Asian and South Asian oil consumers that Canada is a secure, reliable, broadly sustainable place to get these very important fuels for their economies,” he said.
–With files from Associated Press and Reuters
This story was originally published by Global News on July 23, 2026. CityAM Canada is republishing it for our Canadian readers.