Bab al-Mandab Under the Control of Yemeni Government Forces.. What Does This Mean for Energy Markets?

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Recent military developments in Yemen and indications of the government's forces nearing control over areas overlooking Bab al-Mandab have highlighted one of the most important maritime passages in the world. The strait, located at the southern entrance of the Red Sea, not only serves as a route for ships heading to the Suez Canal but has also become part of the global energy security equation in recent years, amid increasing reliance on alternative oil export routes from the Gulf.

This comes at a time when energy markets and global shipping are closely monitoring any changes in the security situation of the strait, which has witnessed disturbances in recent years due to Houthi attacks on commercial vessels, prompting major shipping companies to alter their routes away from the Red Sea. Data from the U.S. Energy Information Administration shows that oil and petroleum liquids flows through Bab al-Mandab reached about 4.2 million barrels per day during the first half of 2025, down from 9.3 million barrels per day in 2023 before the disruptions in navigation in the region.

However, the importance of Bab al-Mandab today is no longer limited to being a gateway to the Suez Canal, as it has also become a key link in the Saudi oil export network via the Red Sea, making any change in its security situation closely monitored by producers and traders in global energy markets.

The latest data from the U.S. Energy Information Administration reveals that the volume of oil and petroleum liquids transiting through Bab al-Mandab has decreased to about 4.2 million barrels per day during the first half of 2025, compared to 9.3 million barrels per day in 2023 before the escalation of security disturbances in the Red Sea.

This decline represents more than just a decrease in shipping traffic; it reflects a broad shift in the global energy flow map. When one of the main chokepoints becomes more dangerous, companies resort to alternative, longer, and more expensive routes, as has happened with the increased reliance on the Cape of Good Hope route.

According to the same data, the quantities transported via the Cape of Good Hope rose to 9.1 million barrels per day during the first half of 2025, compared to about 6.2 million barrels per day in 2023.

For a long time, the importance of Bab el-Mandeb was linked to the Suez Canal, but recent years have added a new dimension to the strait that directly relates to the security of oil exports.

Saudi Aramco operates the East-West pipeline, which transports oil from the fields in the Eastern Province to the port of Yanbu on the Red Sea, aiming to provide an alternative outlet for exports away from the Strait of Hormuz.

The pipeline's base capacity is about 5 million barrels per day, while its capacity has previously been temporarily increased to 7 million barrels per day by using parts of the natural gas liquids transport network to carry crude oil, according to the U.S. Energy Information Administration.

However, it is important to distinguish between the capacity of the pipeline and the actual export volume. Not all oil that reaches the west coast leaves the Kingdom to global markets, as part of it goes to refineries and industrial complexes on the Red Sea.

Recent market data reported by international media from traders and shipping companies indicate that "Aramco" has pumped about 6 million barrels per day through the pipeline in recent weeks, while the available crude for export from the west coast reached about 4.5 million barrels per day after meeting the needs of local refineries.

Here, the Bab el-Mandeb Strait gains exceptional importance. The oil that reaches Yanbu still needs to cross the strait to reach many Asian markets, making the security of Bab el-Mandeb part of global energy supply security.

The U.S. Energy Information Administration indicated in June 2025 that Saudi "Aramco" shifted part of its oil flows from the Gulf to the Red Sea via the East-West pipeline during periods of turmoil, in an attempt to reduce dependence on the Strait of Hormuz.

Contrary to popular belief, oil prices do not automatically decrease simply due to a change in military control over a region, but fear indicators, risk premiums, and public sentiment may lower prices with initial stability indicators.

The markets do not react to military maps as much as they react to the possibilities of supply disruptions and the costs of transporting and securing them.

Traders in the energy markets link the stability of navigation through Bab el-Mandeb to the costs of transporting oil to global markets, due to the impact of security risks on insurance fees and maritime shipping prices. The U.S. Energy Information Administration has clarified in several reports that disruptions in traffic through major maritime choke points lead to supply delays and increased transportation costs, which may reflect on global energy prices.

During the Red Sea crisis, shipping companies and energy carriers were forced to avoid the traditional route through Bab el-Mandeb and the Red Sea, opting for the longer and more expensive route around the Cape of Good Hope. UNCTAD also noted that rerouting ships increased the distances traveled and transportation costs, weakening the efficiency of global supply chains.

In this context, markets typically look at operational indicators more than focusing on direct military developments. According to UNCTAD assessments, parts of global trade continued to use alternative routes even after some risks subsided, reflecting shipping and insurance companies' reliance on actual risk assessments and maritime incident records when making their operational decisions.

This matter gains particular importance in 2026 with the growing role of the Red Sea in regional energy movement. Data from tanker tracking companies cited in market reports showed an increase in oil flows passing through Bab el-Mandeb during some months of the year, driven by increased reliance on exports transported via the western coast of Saudi Arabia and Red Sea ports.

The repercussions of the disturbances are not limited to energy markets alone. In the latest assessment by the United Nations Conference on Trade and Development (UNCTAD), the organization noted that ships that used to cross the Red Sea in days are now taking additional weeks via the Cape of Good Hope route, which has raised transportation costs and prolonged global supply chains.

The organization also clarified that the volumes of goods transiting through the Suez Canal in May 2025 were still about 70% lower compared to levels in 2023, indicating that global trade has not yet regained its previous balance.

This has led to increased fuel consumption, rising shipping costs, and longer detention of ships, which ultimately reflected on the cost of transporting goods and raw materials worldwide.

Despite the significance of any field shift in Bab el-Mandeb, past experiences suggest that markets will not grant the strait an immediate security certificate.

Global shipping companies look at the number of actual incidents, the stability of insurance premiums, and the regularity of ship movements over several consecutive months before deciding to redirect their fleets to the Red Sea.

For this reason, large parts of global trade continued to use alternative routes even after some risks declined during 2024 and 2025, according to assessments by UNCTAD.

If security stability becomes a permanent reality, Egypt could be the biggest economic winner. The revenues of the Suez Canal Authority rose to about $4.67 billion during the fiscal year 2025-2026, an increase of nearly 23% from the previous year, according to official data announced by the head of the authority, Osama Rabie.

Despite this improvement, revenues are still much lower than the record levels the canal recorded before the disturbances in the Red Sea.

Therefore, the return of ships to the normal route between Asia and Europe via Bab el-Mandeb and then the Suez Canal could provide Cairo with one of its largest economic gains since the beginning of the crisis, alongside reducing global trade costs and improving the flexibility of energy flows.