Oil Wars Are Choking the World's Two Most Important Shipping Lanes — 120 Million Barrels at Risk
Two major energy chokepoints are now under threat at the same time, driving up costs and threatening global fuel supplies.
The world is facing a dangerous energy crisis as wars in the Middle East cut off vital oil routes, sending fuel prices soaring and forcing countries to find alternative paths that are slower, costlier, and still unsafe.
The Houthi rebels in Yemen have captured thousands of kilometres of territory along the Red Sea coast in just days, seizing strategically important islands and taking control of the Bab al-Mandab strait — a vital chokepoint for global energy shipments [242818]. More than 100,000 people have been forced to flee, and in a country where half the population depends on humanitarian aid, civilians are paying the highest price [242818].
The timing could not be worse. The Iran war has forced Saudi Arabia to move oil through its east-west pipeline to Red Sea ports. But drone strikes, blamed on an Iran-backed militia in Iraq, have shut that pipeline down. One estimate suggests a month-long closure could cut global crude supply by 120 million barrels [242818].
Sending oil north is slower and more expensive for Asian markets. It also does not protect ships from Houthi attacks, as the rebels are also targeting oil facilities [242818]. The Bab al-Mandab is the second major energy chokepoint in the region after the Hormuz strait. With both routes now under threat, the economic consequences could be severe [242818].
Satellite images show oil spreading across the Persian Gulf toward protected coral reefs and mangrove forests following attacks in the Strait of Hormuz, one of the world's busiest shipping lanes [245259]. The Strait of Hormuz carries about one-fifth of the world's oil [243378].
Iran's Islamic Revolutionary Guard Corps (IRGC) said it intercepted and destroyed a US MQ-9 Reaper drone over Qeshm Island in the Gulf. The island sits near the Strait of Hormuz. The IRGC did not say when the incident happened or how the drone was brought down. There was no immediate comment from US officials [243378]. This is not the first such incident. In 2019, Iran shot down a US drone over the Strait of Hormuz, nearly triggering a military response [243378].
The longer the Iran war continues, the more harm it will do to companies and banks [243043].
The wars in Iran and Ukraine have revealed a critical weakness in global energy supplies. The world depends heavily on the Middle East and Russia for diesel. Refineries that produce this fuel are now the main bottleneck for energy security [245506].
Ukrainian drones hit the main crude unit at Russia's TANECO refinery, 1,200 kilometers from Ukraine. The unit handles 52 percent of the plant's processing. The strike is one of Ukraine's deepest inside Russia. In response, Russia has seized the local assets of Nestlé and Auchan, turning foreign-owned businesses into bargaining chips [245209].
Polish Prime Minister Donald Tusk warned that Moscow may stage "accidental" drone strikes on NATO members [245209].