Iran's Revolutionary Guard issued a threat this week to close the Bab el-Mandeb Strait, a critical chokepoint at the southern end of the Red Sea, escalating concerns over global oil supply disruptions as the U.S.-Iran war continues to impact the region [1]. The Bab el-Mandeb has become increasingly vital for oil markets, serving as a key alternative route after exports through the Strait of Hormuz plunged due to Iranian attacks on tanker and cargo ships [1]. In response to the closure of Hormuz, Saudi Arabia redirected millions of barrels per day through its East-West pipeline to the Red Sea, with these barrels transiting the Bab el-Mandeb to reach Asian markets such as Japan and South Korea [1].
According to data from Kpler, oil and product exports through the Bab el-Mandeb nearly doubled to 7.2 million barrels per day in April, up from 3.9 million bpd in February, following U.S. and Israeli attacks on Iran [1]. The threat to close the Bab el-Mandeb was made by Iran's Revolutionary Guard on Monday, contingent on Israel halting strikes in Gaza and Lebanon, as reported by the state news agency Tasnim [1]. Tehran has also demanded that any peace deal with the U.S. must include Israel's withdrawal from Lebanon [1].
Market reaction was swift: U.S. crude oil prices spiked 8% at the session high on Monday after Iran's threat against the Bab el-Mandeb [1]. Prices later pulled back after Israel and Lebanon agreed to implement a ceasefire on Wednesday, though the truce's durability remains uncertain [1]. Notably, Hezbollah, Iran's Lebanese ally, rejected the ceasefire deal on Thursday, and Israeli Prime Minister Benjamin Netanyahu emphasized the need to disarm Hezbollah and demilitarize Lebanon [1].
Analysts warn that closure of the Bab el-Mandeb would significantly escalate the situation and have a major market impact by cutting off Saudi barrels destined for Asia, which have helped prevent crude prices from surging even higher [1]. The ceasefire between the U.S. and Iran is described as fragile, with both sides exchanging fire in and around the Strait of Hormuz earlier in the week [1]. Commodity research director Matt Smith noted that further U.S. military escalation would likely prompt Iran to target the Bab el-Mandeb [1]. While Iran's Houthi allies in Yemen have largely stayed out of the current conflict, they previously attacked commercial ships in the Red Sea from 2023 through 2025 in retaliation for Israel's war in Gaza [1].
CONCLUSION
Iran's threat to close the Bab el-Mandeb Strait has sharply heightened oil market volatility, with crude prices spiking on fears of a major supply disruption. The situation remains highly unstable, as ceasefire efforts in the region are fragile and further escalation could have severe consequences for global energy flows.