Oil Price Soars Past $111 as US-Iran War Threatens Bab el-Mandeb Strait

As the US-Iran war enters its 36th day, global oil prices have surged past $111, with a more than 11% hike. This sudden rise in the crude oil price is driven by raising fears over the security of key maritime trade routes. Following the closure of the Strait of Hormuz, markets are now bracing for possible disruptions at the Bab el‑Mandeb Strait.

Oil Prices Surge as Bab el-Mandeb Risks Rise

Amid growing Middle East tensions, the focus is now shifting from the Strait of Hormuz to another critical route: the Bab el-Mandeb Strait. Iran’s latest warning indicates that disruptions could spread beyond the Persian Gulf, threatening global energy and trade.

Amid these speculations, the oil prices have surged by more than 11%, reaching $111. Last day, it experienced the biggest daily price surge in six years. Commenting on the real danger of the rise, Amrita Sen, founder of Energy Aspects, stated, “You are seeing it but the financial market is almost masking the true tightness that everywhere else is showing up.”

The Strait of Hormuz handles nearly 20% of the world’s oil. Its partial closure has already tightened supplies and increased shipping costs. Recently, Bitcoin fell, and oil prices surged sharply after Russia, China, and France vetoed the UN Security Council resolution, supported by Arab nations, to authorize force to reopen the Strait of Hormuz.

Now, the possibility of disruption at Bab el-Mandeb is under speculation since any disruption will lead to ships having to divert to the Cape of Good Hope route. This may add between 10 and 15 days to travel time, thus increasing the cost of transportation of oil, food products, and other goods across the globe. It may increase the price of oil globally, hence leading to further global inflation.

Iran Flags Potential Disruption at Key Shipping Route

Mohammad Bagher Ghalibaf, the speaker of the Iranian Parliament, indirectly threatened the potential closure of Bab el-Mandeb. His statement read,

“What share of global oil, LNG, wheat, rice, and fertilizer shipments transits the Bab-el-Mandeb Strait? Which countries and companies account for the highest transit volumes through the strait?”

Notably, Bab el-Mandeb connects the Red Sea to the Gulf of Aden and the Suez Canal. Around 6 million barrels of oil and 12% of global trade pass through this narrow waterway daily. If this route is blocked, it could put global markets under pressure.

While Bitcoin and other cryptocurrencies continue to face losses amid the ongoing US‑Iran war, the latest development has added even more pressure on digital assets. As experts projected, if this geopolitical pressure persists, Bitcoin could slip to a severe low of $10k.

Recently, BTC saw a sudden slip when Trump hinted at severe attacks against Iran. Traders and businesses are on high alert as the situation unfolds. Rising oil prices may lead to higher fuel bills, more expensive goods, and added pressure on household budgets.