Is the world running out of options?
Analysts are divided, but the margin for flexibility is clearly shrinking.
For Hari from Vanda Insights, the view is stark. “The world is running out of options to mitigate a prolonged closure of Hormuz, let alone a simultaneous blockade of Bab el-Mandeb,” she told CNA.
Sachdeva from Philip Nova was more cautious, saying alternatives still exist – but they are becoming less efficient and more costly.
The Cape of Good Hope remains the main fallback route, but it can only cushion the impact, not absorb it.
“The more chokepoints come under pressure at the same time, the less flexibility the global trading system has,” Sachdeva added.
What could this mean for the global economy?
The most immediate impact would likely be higher oil prices.
Hari warned that crude could spike towards US$150 per barrel, while Sachdeva sees US$100 as a nearer-term risk.
“With commercial and emergency oil stockpiles already thinned out in the first wave of the US-Iran war, crude prices can be expected to spike towards US$150, at least until it brings about a big enough demand destruction,” Hari said.
But the effects extend well beyond energy.
The Red Sea is a major artery for global trade, carrying everything from manufactured goods to agricultural commodities. Prolonged disruption could push up costs for food, fertilisers and industrial materials, raising broader inflation risks.
“The Red Sea is one of the world’s busiest trade corridors, so any prolonged disruption affects global supply chains as a whole,” Sachdeva said.
“What concerns me most is the combined effect of rising oil prices and more expensive maritime transport,” she added.
“Energy becomes costlier, shipping becomes more expensive, and businesses face higher input costs across multiple sectors. That creates a much broader inflationary pressure than simply higher fuel prices.”
For companies reliant on just-in-time supply chains, the implications are particularly acute.
“Any industry actively practising a JIT (just in time) strategy or traditionally dependent on materials supply from the Arabian Gulf states would need to seriously rethink their strategy,” Prof Goh said, warning of “higher costs, slower arrival of goods and more supply-side uncertainty” in the months ahead.