Red Sea

A semi-enclosed body of water stretching roughly 2,250 kilometres between the Gulf of Aden and the Suez Canal, the Red Sea carries approximately 12 per cent of global trade. The Suez Canal at its northern end and the Bab al-Mandeb chokepoint at its southern end make it one of the most strategically consequential waterways on Earth. Littoral states include Saudi Arabia, Egypt, Yemen, Sudan, Eritrea and Djibouti.

The Red Sea's commercial significance rests on the Bab al-Mandeb passage, a 29-kilometre narrows between Yemen and Djibouti that links the Red Sea to the Gulf of Aden and the Indian Ocean. When that passage is contested, shipping faces a binary choice: accept the risk or divert around the Cape of Good Hope, adding ten to fourteen days to Asia-Europe voyages. Egypt and Djibouti depend heavily on Suez Canal and port revenues that collapse when traffic diverts, stripping hundreds of millions from already fragile state budgets.

On 8 June 2026, the Houthis (Ansar Allah) declared a "complete and total ban on Israeli maritime navigation in the Red Sea" and fired rockets at Jaffa, their first strike on Israeli territory since the April ceasefire. For the first time in the conflict, both of the region's maritime chokepoints simultaneously sit under hostile authority: the Strait of Hormuz runs under IRGC toll enforcement and CENTCOM blockade operations, and Bab al-Mandeb now carries a declared exclusion on Israeli-linked hulls.

The double chokepoint removes the hedge that had allowed shipowners to absorb one closure by routing through the other. Protection and Indemnity clubs price war risk chokepoint by chokepoint; underwriters have no modern template for pricing a simultaneous Gulf-and-Red-Sea exclusion for Israeli-linked cargo. The practical enforcement mechanism runs through insurance, not naval patrols: whether the Houthis interdict vessels or leave the ban declaratory remains the open question. During March 2026 they sustained three strikes on Israel in three days, confirming they hold the missiles to make a blockade real. The IRGC's authorisation in June of "other fronts including Bab el-Mandeb" as a pressure tool confirms the Houthis are operating in coordination with Iran's Hormuz campaign.

Charter rates at $800,000 per day and war-risk premiums at or above 2024 Houthi campaign levels reflect both chokepoints simultaneously. Major shipping lines including CMA CGM had already rerouted around the Cape of Good Hope before the June ban formalised the double exposure.