The Houthis have completed their takeover of Yemen's western coast and Perim island, moving into a position to threaten traffic through the Bab el-Mandeb strait directly. Markets did not wait: Brent opened the week at $108.30 a barrel, up 3.53 per cent on the day, its highest in four months after a gain of more than 9 per cent last week. European gas rose to 83.92 euros per megawatt-hour, up 5.53 per cent in a day and almost 161 per cent in a year. The problem is not a single stranded vessel but the disappearance of alternative routes.
The chokepoint that replaced Hormuz
Bab el-Mandeb is the southern gateway to the Red Sea and the approach to Saudi oil terminals, as well as the route for shipping crude to Europe while avoiding the Strait of Hormuz. Energy Information Administration data reconstructed by FinanceFeeds and The Caspian Post measure the substitution that took place within months: oil flows through Hormuz fell from 21.6 million barrels a day in the fourth quarter of 2025 to 4.9 million in the second quarter of 2026, a drop of 77 per cent, while Bab el-Mandeb went from 5.4 million to 8.1 million barrels a day. For liquefied natural gas the collapse at Hormuz is even sharper, 92 per cent, because gas carriers have fewer alternatives than tankers. The barrels did not disappear, they changed doors: Saudi Arabia redirected crude from its eastern fields to the port of Yanbu through the East-West pipeline, which is precisely the route now under contest.
On the ground, Houthi fighters reached the coastal town of Dhubab and, by boat, Mayun island, also known as Perim, at the heart of the strait, after government forces withdrew, Al Jazeera reported; they also seized the al-Omari camp overlooking the passage. The group's military spokesman, Brigadier-General Yahya Saree, said Saudi-backed forces had been expelled from six districts covering 5,400 square kilometres. A source cited by Agence France-Presse summed it up: the Houthis have completed their takeover of the Bab el-Mandeb area. On Friday Brent had settled at $104.61, down 2.81 per cent on the day but up about 9 per cent over the week.
Brent at $108 and the surge in energy prices
On prices, Europe's benchmark is trading in a market with no room to manoeuvre. Dutch natural gas, the continent's reference, reached 83.92 euros per megawatt-hour, after clearing 75 euros earlier in September and touching a three-year high. The increase reflects the threat to liquefied natural gas shipments through the Gulf, where Qatar is one of the world's largest suppliers, and it arrives as Europe enters the heating season with storage filled more slowly than usual. Energy costs are already feeding inflation expectations: Germany's ten-year Bund yield has climbed to multi-year highs, a sign investors fear a second energy shock that keeps consumer prices high for longer.
In the United States, gasoline futures in New York trade around $3.40 a gallon, almost 69 per cent higher than a year ago, while the national average at the pump has risen to about $4.30, more than 34 per cent above last year's level. Diesel, which powers trucks, trains and farm machinery, has topped $6 a gallon for the first time, at about $6.06, an increase of more than 63 per cent year on year, according to figures from the AAA motoring club.
The strain is not only financial. Saudi crude exports fell to 3.2 million barrels a day last month, the lowest in more than a decade according to maritime analytics firm Kpler, and Saudi Arabia suspended the East-West pipeline as a precaution after Thursday's attacks. Research firm Capital Economics warns that fighting on both sides of the Arabian peninsula raises the risk of further energy price increases in the coming weeks.
Goldman Sachs: $120 is on the table
Goldman Sachs raised its crude forecasts by $5: Brent at $85 in December 2026 and $80 in 2027. It is the upside scenario that shows what is at stake. According to strategists led by Daan Struyven, Brent would rise above $120 if average Gulf production in 2027 stays 4 million barrels a day below pre-war output, against the 0.5 million barrels of decline built into the base case. The bank singles out mounting attacks on shipping in the Gulf and the Red Sea as the most likely trigger. The options-implied probability of Brent trading above $100 in March 2027 has risen to around 25 per cent, from about 6 per cent a month earlier, and Goldman continues to recommend European diesel timespreads as a hedge, which could more than double if refinery outages persist.
The political picture
Diplomacy offers no exit yet. Talks in Oman between Iran and Gulf Arab states on navigation through Hormuz, due on Monday, were postponed at the request of some regional countries, hours after an attack on an Iranian commercial vessel killed one person in the strait. Before the war about a fifth of the world's oil and liquefied natural gas left the Gulf through that passage, and U.S. President Donald Trump is pressing to restore shipping to pre-war levels and cool energy prices before November's midterm elections.
The Yemeni group says international navigation is not at risk and that its targets are Saudi vessels, in response to the blockade it has endured. For now, the market is pricing the opposite.
Sources
- Al Jazeera, Houthis control key shipping route after gains along Yemen's Red Sea coast
- Al Jazeera, Tehran and Muscat delay talks, citing regional consensus need
- FinanceFeeds, Houthis Took Perim Island and Saudi Arabia's Hormuz Workaround Was Shut in the Same 48 Hours
- The Caspian Post, Hormuz Disruption Hits LNG Flows Harder Than Oil Shipments
- Trading Economics, Brent crude oil
- Trading Economics, EU natural gas
- Trading Economics, Gasoline
- Yahoo Finance, Goldman Lifts 2027 Oil Outlook as Middle East Shipping Risks Persist
- Yahoo Finance, European Gas Prices Hit Highest Level Since 2023 on Iran Supply Fears
- NPR, Why Houthi gains in Yemen could push gas prices even higher
