Houthis take Bab el-Mandeb as a drone strike shuts Saudi Arabia’s Hormuz bypass

Saudi Arabia has shut its East-West pipeline after a drone attack blamed on Iran-backed militias in Iraq^4,5. The 745-mile line had helped the world’s largest crude oil exporter bypass the blocked Strait of Hormuz². It was built to keep Saudi crude flowing when Hormuz became impassable, and that alternative route has now been hit as well³.

At the other end of the Red Sea, Iranian-backed Houthi rebels have captured a strategic island in the Bab el-Mandeb Strait⁷. Al Jazeera identified it as Mayun Island and said the takeover solidifies the group’s position in the strait, while questioning whether it can be held long term¹¹. The Telegraph described the rebels as taking effective control of the strait⁸. Ship traffic through Bab al-Mandeb has halved¹⁰.

Why it matters to investors

Both of the region’s escape routes for crude are contested at the same time. Around 12% of global trade passes through the Bab el-Mandeb Strait at the southern end of the Red Sea⁶. The Houthis announced an embargo last month and have been attacking vessels passing through it¹⁰. The seizure represents the group’s biggest territorial gains in years and could boost Iran’s strategy of driving up world oil and gas prices⁹.

The pricing consequence is already being modelled. The IEA has warned that Hormuz disruptions will cut global oil supply by 4.3 million barrels per day in 2026¹. One account of the pipeline attack framed it directly as something that could raise global gas prices³. The shutdown limits Saudi oil flow at exactly the moment the sea route the pipeline was meant to replace is itself closed².

What to watch

The terms Iran is asking for. Reuters reports that Tehran wants its control of the Strait of Hormuz recognised, which would allow it to collect fees from ships that use it, and that Washington rejects this⁴. A fee regime on Hormuz would convert a military standoff into a standing charge on seaborne crude.

Whether the Houthis can hold Mayun Island is the nearer question, and Al Jazeera flags that holding it long term could be difficult¹¹. Ship traffic is the metric to follow: it has already halved, and the rebels retain the option of closing the strait outright^8,10. Saudi exports are the direct exposure, since the island seizure threatens them specifically⁷.