As tensions in the Middle East escalated again over the weekend, the Iran-aligned Houthis threatened to close the Bab el-Mandeb Strait, the key oil shipping lane still open for crude shipments from the Middle East via ports on the Red Sea.
“If Sana’a decides to close the Bab al-Mandab, then all of mankind and jinn will be utterly powerless to open it,” Houthi Deputy Foreign Minister Hussein al-Ezzi posted on X, as quoted by media.
“And therefore, it is best for Trump – and the complicit world – to immediately end all practices and policies that obstruct peace, and to show the respect required for the rights of our people and nation,” the senior Houthi official said.
Tensions in the Middle East subsided only for a few hours on Friday when Iran declared the Strait of Hormuz open, only to announce on Saturday that it is closed again, due to the continued U.S. naval blockade outside the Strait of Hormuz targeting to choke off Iranian oil exports.
After sinking 10% on Friday, oil prices rebounded early on Monday as traffic through the world’s most vital chokepoint remains severely restricted and the U.S. Navy intercepted an Iranian vessel it accused of attempting to break its blockade.
The seizure reignited fears of a major escalation in the conflict and a prolonged disruption in the Strait of Hormuz.
All those market participants who had bet on Friday on a quick resolution to the crisis have now started to recalibrate their expectations.
“Developments over the weekend suggest the thaw has been short-lived, with Brent opening stronger this morning. Iran reimposed its restrictions on the Strait of Hormuz after the US kept its blockade in place,” ING’s commodities strategists Warren Patterson and Ewa Mathey said in a Monday note.
“After the US seized an Iranian-flagged vessel, there will be doubts over planned peace talks,” they added.
The Houthi threat to close the Bab el-Mandeb Strait would cut off the oil exports from Saudi Arabia, which had moved all the shipments it could to the Yanbu port on the Red Sea amid the closed Strait of Hormuz.
By Tsvetana Paraskova for Oilprice.com
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