US-Israel War On Iran: Why the Bab-el-Mandeb Strait Crisis Could Trigger The Next Trade Shock

The Bab-el-Mandeb Strait—also referred to as the “Gate of Tears”—is a narrow and strategically vital waterway between Yemen and the Horn of Africa. It serves as a crucial link between the Red Sea and the Gulf of Aden, forming a key route for maritime trade between Asia and Europe via the Suez Canal.

Approximately 10–12% of global trade and oil shipments pass through this waterway. Therefore, it is a critical route for Asia–Europe trade and energy supply chains.

Iran’s parliament has also cleared a proposal to levy tolls on vessels transiting the Strait of Hormuz. While the exact charges remain unspecified, the plan also allows for restricting or denying passage to ships associated with the United States, Israel, and countries imposing sanctions on Iran, The Wall Street Journal reported.

This move by Tehran to tighten its grip over the strategic waterway makes the Bab-el-Mandeb Strait even more critical for the passage of oil shipments.

What Is the Current Crisis?

The current crisis around this waterway is connected to the escalating Iran–Israel–US war and the possible entry of Yemen’s Houthi rebels into the conflict. The Houthis, aligned with Iran, have threatened to block or attack ships in the Bab-el-Mandeb Strait. They have previously targeted vessels using missiles and drones in the Red Sea.

Iran has also hinted at opening multiple maritime fronts, including this strait, to counter Western pressure.

Who Are Houthis?

The Houthis, formally known as Ansar Allah (Partisans/Supporters of God), are a Shia Islamist political and militant group based in Yemen, emerging from the Zaydi Shia community in the country’s north. They began as a revivalist movement in the 1990s but evolved into a powerful militia after a series of conflicts with the Yemeni government.

Since 2014, they have controlled large parts of Yemen, including the capital, Sanaa, and are a key player in the ongoing Yemeni civil war. The group is widely seen as aligned with Iran and has been involved in regional tensions, including attacks on shipping routes in the Red Sea.

Iran has been empowering the Houthis, providing them with political backing, military training, and weapons support. For Iran, supporting the Houthis serves multiple strategic interests: it helps expand its regional influence, counter rivals like Saudi Arabia and the United States, and create pressure points along critical global trade routes such as the Red Sea. By backing the Houthis, Iran effectively gains a low-cost way to project power and disrupt adversaries without direct confrontation.

Impact On India

The immediate upside is that India’s exposure remains relatively limited.

Around 40–50 per cent of the country’s crude imports do not pass through the Bab al-Mandab, as they are routed via the Strait of Hormuz. However, a portion of these supplies has been disrupted by Tehran’s blockade. The government has sought to cushion the impact by diversifying its sourcing base—from 27 to 41 suppliers—and by resuming crude purchases from Russia. These imports had earlier been halted under US pressure as part of negotiations for an interim tariff framework agreement.

That said, the longer-term implications could be more significant. Rerouted LNG supplies from Qatar and crude shipments via Yanbu are likely to raise both India’s crude basket prices and freight costs.

The Bab al-Mandab disruption, however, extends beyond oil. The route accounts for roughly 15–20 percent of global container traffic, including dry bulk cargo such as machinery, food, agricultural produce, and manufactured goods moving between Asia and Europe. Re-routing vessels around Africa increases transit time and costs, raising logistical burdens for manufacturers, triggering downstream supply-chain disruptions, and ultimately adding to inflationary pressures—particularly for India’s poorer populations.

Global Energy Crisis

The world is currently facing a sharp energy crisis triggered by escalating conflicts. Oil prices have surged dramatically in March 2026, with Brent crude crossing $110–$116 per barrel and touching highs near $119, marking one of the steepest monthly increases on record.

Meanwhile, US benchmark WTI crude has risen above $100 per barrel, reflecting fears of supply disruptions affecting nearly 20% of global oil flows. Analysts warn prices could spike further—potentially to $125–$150 per barrel—if key shipping routes are blocked, raising concerns of inflation, fuel price hikes, and a broader global economic crisis.