The closure of the Strait of Hormuz by Iran’s Islamic Revolutionary Guard Corps represents the most significant disruption to global oil supplies in recent history. President Trump’s administration appears to have underestimated the Iranian response to combined American and Israeli military action, yet this development should come as little surprise to seasoned market participants who have long anticipated such contingencies.
Saudi Arabia and the United Arab Emirates have spent decades constructing infrastructure specifically designed to circumvent dependence on the Hormuz chokepoint. Saudi Arabia’s pipeline network, stretching nearly 750 miles across the Arabian Peninsula from Abqaiq to the Red Sea port of Yanbu, possesses the theoretical capacity to redirect approximately two-thirds of the kingdom’s crude exports, potentially reaching five million barrels per day. The UAE has similarly invested in pipeline infrastructure from Abu Dhabi to Fujairah, capable of handling approximately 1.5 million barrels daily. Combined, these alternative routes could theoretically compensate for roughly one-third of the 20 million barrels that previously transited the Hormuz Strait daily.
However, Iran’s strategic response focuses on neutralising these alternative pathways. A drone strike against Fujairah’s oil industries zone on Monday initiated what local authorities characterised as a “large fire,” deliberately targeting the UAE’s ability to utilise this export corridor. Yanbu faces analogous threats from missiles operated by Iranian-backed Houthi forces, which command substantial territorial holdings across Yemen and control the Bab el-Mandeb Strait, the critical gateway to the Red Sea.
The Houthi movement’s historical record of disruption warrants serious consideration. Between 2022 and 2024, their attacks reduced container vessel traffic through the Red Sea by 90 per cent. Previous missile strikes against Yanbu’s oil installations in 2021 and 2022 demonstrate their operational capability against fixed infrastructure. Dozens of tankers currently navigating the Indian Ocean toward Yanbu represent precisely the kind of targets the Houthis have repeatedly engaged.
The Houthis have thus far remained on the periphery of Iran’s retaliatory campaign, yet their strategic importance cannot be overstated. Iran has invested considerable resources over many years providing advanced weaponry and military advisers to the movement for exactly this contingency. Simultaneous closure of both Hormuz and the Bab el-Mandeb Strait would represent a dramatic escalation capable of generating significant additional upward pressure on oil prices and triggering substantial market volatility.
Determining Houthi intentions presents considerable complexity. Whilst these forces share Shia Islam with Iran’s leadership, they adhere to Zaydism rather than the Twelver doctrine practised by Iranian elites. The late Supreme Leader Ayatollah Ali Khamenei may have commanded considerable personal authority capable of securing cooperation; whether his successor, Mojtaba Khamenei, possesses equivalent influence over the movement remains uncertain. Importantly, any Houthi engagement against Red Sea shipping would invite retaliation from the United States, Israel, and Saudi Arabia simultaneously, substantially elevating the military risks the movement would assume.
Abdul Malik al-Houthi, the movement’s leader, now occupies an unprecedented position of influence over matters with genuine global economic consequences. The convergence of Iranian pressure, demonstrated military capability, and the presence of vulnerable commercial shipping creates a situation where escalation remains distinctly possible, despite the substantial retaliatory risks that such action would entail.
