Another Hormuz? The Red Sea’s Threat to the Global Economy

Although the Strait of Hormuz, which had been closed to shipping since late February, appears to be slowly reopening as part of a U.S.-Iran ceasefire agreement, concerns persist about the security of another regional maritime choke point: the Red Sea. On June 8, the Iran-backed Houthi rebels announced a complete ban on Israeli ships transiting the Red Sea, calling them “legitimate military targets.” The announcement came after Iranian officials threatened in April to obstruct trade in the waterway if the Trump administration upheld its naval blockade on Iran. The blockade has since been lifted, but worries linger about the waterway’s vulnerability.

The Red Sea, a 1,400-mile-long inlet between northeastern Africa and the Arabian Peninsula, is one of the world’s most important arteries for global shipping. Each year, approximately 12 to 15 percent of global maritime trade worth more than $1 trillion transits the waterway, which extends from the Suez Canal in the north to the Bab el-Mandeb Strait in the south. 

Alongside the Strait of Hormuz, the Red Sea could form a critical economic pressure point in the Iran war. Experts say sustained interference in the Red Sea, especially by the Houthis, would trigger severe supply-chain delays, drive up energy prices, and further destabilize the global economy.

The waterway has been an active conflict zone since 2023, when the Yemen-based Houthis began attacking commercial and naval vessels in protest of Israel’s military campaign in Gaza, significantly disrupting international shipping. The group’s entry into the Iran war in March by firing missiles at southern Israel underscored the Red Sea’s potential to become a new front in broader regional tensions. Its total ban on Israeli and Israel-linked shipping in the waterway threatens further escalation amid renewed hostilities between Israel and Iran.

Why is the Red Sea strategically important?

The UN International Maritime Organization describes the Red Sea as “one of the most critical maritime routes enabling global trade.” Between 12 and 15 percent of international seaborne commerce and 30 percent of global container traffic pass through the waterway annually, ferrying agricultural products such as grains and fertilizers, raw materials like ores and metals, industrial components like electronics, automotive parts, and energy resources.

About 4.9 million barrels per day (bpd) of crude oil and petroleum products transited the Suez Canal and the Suez-Mediterranean Pipeline—both on the Red Sea’s northern end—in the first half of 2025, according to the U.S. Energy Information Administration (EIA). Some 4.2 million bpd crossed through the Bab el-Mandeb Strait, at the Red Sea’s southern end. Together, oil shipments via these three routes accounted for approximately 6 percent of all seaborne-traded oil during that time. By comparison, oil flows through the Strait of Hormuz averaged almost 21 million bpd in the same period.

The Red Sea is also considered a digital choke point, as an estimated 90 percent of undersea fiber optic cables linking Europe and Asia pass through the waterway. These cables “represent critical sovereign underwater infrastructure that is no less significant than oil and trade routes,” Abdullah Jaber AlZaidi, senior advisor on defense and security studies at the Gulf Research Center, wrote in a CFR global perspectives roundup. Previous damage to them has caused major disruptions to internet connectivity and cloud services across the region, as well as in Africa and Asia.

How does the Red Sea fit into the broader Iran war?

As disruptions in the Strait of Hormuz persist, experts say the Red Sea could become the war’s next choke point should Iran leverage the Houthis as a proxy force to blockade maritime traffic in the Bab el-Mandeb Strait.

“Historically, Washington’s protection of freedom of navigation went hand-in-hand with the core interest in ensuring the free flow of oil and gas from the Middle East,” said CFR expert Steven A. Cook. “The closure of the Strait of Hormuz and the potential closure of the Bab el-Mandeb are a test for both.”

The twenty-mile-wide strait is the only point of entry to the Red Sea from the Indian Ocean and runs alongside Houthi-controlled territory in Yemen. While it’s unclear whether Iran would deploy its own forces to attack shipping in the strait, years of Iranian support has boosted the Houthis’ military prowess, enabling them to project force into the Bab el-Mandeb Strait and the broader Red Sea.

Ali Akbar Velayati, senior advisor on international affairs to Iranian Supreme Leader Mojtaba Khamenei, wrote on social media in April that Iran’s “Resistance front”—referring to its coalition of Iran-aligned groups across the Middle East—“views Bab el-Mandeb as it does Hormuz.” He added that “if the White House dares to repeat its foolish mistakes, it will soon realize that the flow of global energy and trade can be disrupted with a single move.”

Houthi attacks on vessels in the Bab el-Mandeb Strait have largely paused since Israel and Hamas reached a ceasefire in Gaza in late 2025. However, experts say resumed attacks would only deepen the existing oil and economic crisis brought on by the Iran war and risk provoking a regional response from countries that rely on the strait, such as Saudi Arabia. 

Saudi Arabia exports around four to five million bpd through a pipeline network connecting its oil fields to Red Sea ports, making access to the Bab el-Mandeb Strait critical, according to CFR expert Edward Fishman. “But the Houthis, who are Iranian allies, could theoretically shut off the Bab el-Mandeb and basically make it so that Saudi Arabia doesn’t have any way to export oil,” he said.

Previous Houthi attacks on the Red Sea have highlighted the economic stakes. The group’s response to the Israel-Hamas war disrupted maritime traffic in the Bab el-Mandeb Strait, causing oil shipments to fall by more than half, from 9.3 million bpd in 2023 to just 4.1 million bpd in 2024.

Who is involved in the Red Sea conflict?

Several major regional and external actors are involved in the Red Sea, including:

Houthis. The Yemen-based group, considered an independent partner of Iran, began targeting Israeli and international shipping in the Red Sea in late 2023 in response to Israel’s military campaign in Gaza. The group announced a halt to attacks on non-Israeli vessels following the Gaza ceasefire, but experts warn that attacks on Red Sea shipping could resume if regional hostilities escalate or ceasefire efforts collapse.

Iran. Tehran uses the Red Sea to project power, disrupt global trade, and challenge Western influence in the region. In retaliation for the United States’ naval blockade on Iranian ports, Iranian officials have threatened to use the Houthis to shut down the Bab el-Mandeb Strait. Iran is the group’s primary benefactor, providing them with security assistance including weapons transfers, training, and intelligence support.

Israel. The country has been a central target of Houthi attacks, which have significantly disrupted activity at the Port of Eilat, Israel’s only port on the Red Sea. Houthi aggression prompted Israel to launch retaliatory air strikes on Houthi-controlled ports and infrastructure in Yemen, though direct hostilities largely halted in late 2025. They have since resumed.

United States and allies. Washington and its allies have taken action to protect global shipping and restore freedom of navigation in the Red Sea. In response to the Houthis’ initial attacks in 2023, the Biden administration launched Operation Prosperity Guardian, a multinational security initiative that included forces from France, the United Kingdom, and other European countries. In March 2025, the Trump administration launched Operation Rough Rider, a more aggressive offensive targeting Houthi bases in Yemen. The operation ended in May 2025 after the United States reached a temporary ceasefire agreement with the Houthis. However, the agreement did not mandate the Houthis to stop attacking other countries’ ships—namely Israeli and Israeli-linked ones—and the ceasefire collapsed after two months.

What are the ramifications beyond the Middle East?

In addition to disruptions to international shipping, experts warn that greater instability in the Red Sea could exacerbate existing crises in North and East Africa. 

“There are already multiple, interconnected tensions in the region relating to the Nile waters, Ethiopia’s desire for port access, Sudan’s civil war, and Somalia’s political and security crises,” said CFR Africa expert Michelle Gavin. Many of these conflicts are being shaped by competition among Middle Eastern powers—including Qatar, Saudi Arabia, Turkey, and the United Arab Emirates (UAE)—through strategic investments, military support, and security cooperation.

“The more heated the competition gets, the more it is likely to result in conflict on African soil,” Gavin added.

What are the alternatives to the Red Sea?

For Iran and the Houthis, entirely blocking off the Bab el-Mandeb Strait would be difficult. Unlike the Strait of Hormuz, which is the only maritime outlet from the Persian Gulf to the open ocean, ships that enter the Red Sea via the Bab el-Mandeb Strait could exit through the Suez Canal in the north. Even so, a simultaneous and prolonged disruption of both straits could disrupt oil transit routes carrying about 24 percent of global oil supply, according to EIA data, leaving countries with even fewer options to transport oil in and out of the region. 

CFR’s Fishman noted that while alternative routes exist, they are significantly less efficient. Oil shipped from Saudi Arabia’s Red Sea ports to Asia could travel north through the Suez Canal and the Mediterranean Sea before circumnavigating the entire African continent to get to the Indian Ocean. But “it’s a substantially longer trip,” Fishman said. “Not impossible—you can still get the product to market—but it’s nowhere near as convenient as using the Bab el-Mandeb.”

Routing vessels around South Africa’s Cape of Good Hope also presents challenges. “Southern African ports are not well positioned to take full advantage of the maritime traffic being rerouted around the Cape,” said Gavin, adding that “it takes time to invest in port infrastructure and efficiency.”

Some Gulf states have invested in overland trade and logistics corridors to reduce reliance on Red Sea shipping routes—such as the land bridge between the UAE and Saudi Arabia—but these alternatives are costly.