Middle East Conflict Spreads! Houthis Enter the War, Is the "Second-Largest Energy Chokepoint" Bab el-Mandeb Strait Also in Jeopardy?

The Houthi movement has officially entered the Iran war, sending new shockwaves through the global energy market. According to reported by Xinhua News Agency, the Yemen-based Houthis issued a statement via their controlled Al-Masirah TV on the 28th, stating that the group launched ballistic missiles at Israel in the early hours of that day and that operations will continue until the aggression ceases. This move signifies the opening of a new front in the war, once again exposing the Bab el-Mandeb Strait at the southern end of the Red Sea to risk. Saudi Arabia transports crude oil via the East-West Pipeline to Yanbu Port and then out through the Bab el-Mandeb Strait; this is the core alternative route for crude oil transport when the Strait of Hormuz is obstructed. Since March, crude oil loadings at Yanbu Port have surged to a daily average of approximately 3.4 million barrels, with some single-day flows exceeding 5 million barrels this week, setting record highs. Meanwhile, Iran launched retaliatory strikes against Gulf Arab states and Israel on Saturday. A fire broke out in the Abu Dhabi Industrial Zone in the UAE, Kuwait Airport's radar systems were heavily damaged by drones, and the Port of Salalah in Oman was forced to suspend operations. Expectations for a ceasefire in the energy market have cooled, with Brent crude closing above $115 per barrel on Friday, a cumulative increase of about 60% since the outbreak of the conflict. Houthi Entry Escalates Risk in Bab el-Mandeb Strait The Houthis' involvement adds a highly sensitive energy-geographical variable to the conflict. The Bab el-Mandeb Strait is the throat connecting the Red Sea to the Gulf of Aden, and alongside the Strait of Hormuz, it is one of the world's two most critical energy shipping lanes. Since the outbreak of the Israel-Hamas war in 2023, Houthi missile and drone attacks have effectively blocked most Western shipping companies from transiting the waterway. This situation now risks further deterioration. Notably, Saudi Arabia is currently exporting oil through the port of Yanbu to bypass the nearly closed Strait of Hormuz, and this port is entirely within the range of Houthi missiles. Bloomberg previously reported that the U.S. has issued warnings about the threat of Houthi attacks near the Bab el-Mandeb Strait, a potential risk that continues to rise as the situation escalates. This means that the alternative export route activated by Saudi Arabia to deal with the closure of Hormuz also faces a direct threat. If Yanbu Port is hit, another vital safeguard for global crude supply will be shaken, and the "buffer solution" the market is counting on may fail. Strait of Hormuz Uncertain, Negotiations Stalled The Strait of Hormuz has been nearly closed since the U.S.-Israeli coalition launched strikes against Iran on February 28. Approximately one-fifth of the world's oil and liquefied natural gas normally flows through this waterway. Trump pushed for negotiations this week, extending the deadline for Tehran to reopen the Strait of Hormuz to April 6 and proposing a 15-point plan. The core conditions include: Iran dismantling nuclear facilities and cutting its missile stockpile in exchange for sanctions relief. Iran rejected this plan, insisting on war reparations, recognition of some form of control over the Strait of Hormuz, and guarantees that the U.S. and Israel will not attack Iran again. According to media reports citing people familiar with the matter, U.S. Secretary of State Marco Rubio told G7 counterparts in a call on Friday that the war would end in weeks rather than months. Trump's envoy Steve Witkoff also indicated that a meeting between the U.S. and Iran could take place "this week," with Pakistan seen as the most likely location for talks. Foreign ministers from Saudi Arabia, Turkey, and Egypt are expected to visit Islamabad from March 29 to 30 to consult on regional de-escalation efforts. Ground Invasion Rumors Heat Up, Market Sentiment Remains Under Pressure While extending the deadline to April 6, Trump has also bought more time for the U.S. to build up forces in the region, fueling speculation about ground deployments. Military analysts cited by the media pointed out that if Trump decides to use ground troops, he might choose to seize the small Kharg Island in the Persian Gulf—where nearly all of Iran's oil exports pass through. The U.S. might also seek to control the Iranian side of the Strait of Hormuz to forcibly reopen this waterway—which is vital for oil, gas, and container ships—or deploy special forces to remove approximately 440 kg of highly enriched uranium from Iran. Financial markets have responded to the escalation: U.S. stocks fell to a more than seven-month low on Friday, and the 10-year Treasury yield climbed to its highest since July. Fuel shortages continue to brew in many parts of the world, with the Philippines declaring an energy emergency, and concerns among economists regarding stagflation risks are rising.