Since late 2023, Houthi attacks on commercial shipping in the Red Sea and Bab el-Mandeb strait have forced a massive rerouting of global oil and container traffic. The disruptions have added costs and transit time to critical energy supply chains.
Scale of the Disruption
Before the attacks, approximately 4.8 million barrels per day of crude oil and refined products transited the Bab el-Mandeb strait — the southern entrance to the Red Sea and Suez Canal. An estimated 60% of tanker traffic has been rerouted around the Cape of Good Hope, adding 10-14 days of transit time and significant fuel costs.
Price Impact
The rerouting adds an estimated $1-2 per barrel to crude oil delivery costs for cargoes moving between the Middle East/Asia and Europe. This cost premium flows through to refined product prices, including gasoline and diesel at the pump. Insurance rates for vessels transiting the Red Sea have also increased dramatically.