According to AJOT reports the Bab el-Mandeb Strait, one of the world’s essential energy chokepoints, experienced a sharp decline in oil traffic, with flows dropping by more than 50% in the first eight months of 2024. Attacks by Yemen-based Houthi forces on vessels in the Red Sea have heightened security concerns, leading many shipping companies to reroute through the Cape of Good Hope. This has led to higher operational costs and increased shipping times, highlighting the strategic importance of secure passage through the Bab el-Mandeb.
Shift to Longer, Costlier Routes via the Cape of Good Hope
To avoid risk, oil carriers have increasingly opted for the Cape of Good Hope route. This detour has resulted in a substantial rise in the volume of oil passing around Africa, increasing from an average of 6 million barrels per day (b/d) in 2023 to 9.2 million b/d in early 2024. The increased dependency on this longer route underscores the impact of regional instability on global trade and the importance of maintaining secure, efficient energy corridors.
The Broader Impact on Key Global Chokepoints
Other critical energy chokepoints, such as the Suez Canal, the SUMED pipeline, and the Strait of Hormuz, remain pivotal in global oil flows. The Bab el-Mandeb disruptions have put pressure on these routes, with the Strait of Hormuz, for example, handling approximately 20% of the world’s petroleum liquids in 2023. These alternative routes are increasingly vital to mitigating risks and sustaining uninterrupted supply to Europe and North America.
Rising Global Oil Prices Amid Middle East Tensions
Escalating geopolitical tensions in the Middle East, particularly involving Iran and Israel, have driven global oil price increases, with Brent crude oil reaching $81 per barrel by October 7, 2024. Reduced flows through Bab el-Mandeb and heightened security risks in other critical routes contribute to price volatility. The global market’s sensitivity to Middle East security underscores the interconnected nature of energy prices and regional stability.
These changes highlight the vulnerability of global oil markets to disruptions at chokepoints, the role of alternative routes, and the price impact of geopolitical tensions.
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Source: AJOT
