12 September 2026
Executive Summary
The risk to Red Sea shipping has escalated materially after Iran-aligned Houthi forces seized the strategic island of Perim, also known as Mayun, inside the Bab el-Mandeb Strait.
The Houthis have also reached the nearby mainland town of Dhubab following their rapid advance down Yemen’s Red Sea coast.
Perim sits directly within Bab el-Mandeb and separates the Strait into its principal navigation channels.
Control of the island therefore gives the Houthis a significantly stronger physical position overlooking one of the world’s most important maritime chokepoints.
The development is particularly serious because Saudi Arabia has simultaneously shut its East-West oil pipeline as a precaution following a drone attack.
That 1,200-kilometre pipeline had become increasingly important because it allows Saudi crude to move from eastern production areas towards Red Sea export terminals without passing through the Strait of Hormuz.
Industry estimates indicate that the line has recently been carrying approximately 4 million to 5 million barrels per day, equivalent to around 4%-5% of global oil supply.
The two developments therefore affect separate components of the same contingency strategy:
- Perim threatens shipping through Bab el-Mandeb.
- The Saudi pipeline shutdown affects the land route designed to bypass Hormuz.
The global energy system is losing redundancy precisely when it needs it most.
UK Impact
UK businesses may experience consequences through:
- Higher oil prices.
- Higher diesel prices.
- Marine insurance.
- War-risk premiums.
- Container freight costs.
- Longer Asia-Europe voyages.
- Supplier surcharges.
- Petrochemical inflation.
- Airfreight substitution costs.
- Higher working-capital requirements.
The issue is particularly important for businesses that had already adjusted supply chains away from Hormuz.
Some companies may have assumed that routing through Saudi Red Sea infrastructure reduced their exposure.
That assumption now requires urgent review.
A contingency route is only useful if the infrastructure and maritime corridor supporting it remain independently available.
Global Impact
Bab el-Mandeb handles a substantial share of global energy and goods traffic.
The Strait is only around 29 kilometres wide at its narrowest point, with Perim dividing the navigation channels.
Disruption forces vessels travelling between Asia and Europe to consider diversion around the Cape of Good Hope.
That can add:
- Significant sailing time.
- Additional fuel consumption.
- Higher crew costs.
- Additional insurance.
- Increased vessel utilisation.
- Reduced effective global shipping capacity.
The current situation is particularly unusual because three different routes are simultaneously under pressure:
- Hormuz maritime traffic.
- Saudi Arabia’s East-West pipeline.
- Bab el-Mandeb / Red Sea shipping.
This creates correlated chokepoint risk.
Infrastructure that was designed to provide redundancy is being threatened by the same wider regional conflict.
Our View
Businesses should now test whether their Middle East contingency routes remain genuinely viable.
Companies should ask:
- Does our cargo depend upon Bab el-Mandeb?
- Does it normally use the Suez Canal?
- Has the carrier changed its Red Sea policy?
- Could the vessel be rerouted around Africa?
- How much additional transit time would that create?
- Who pays additional fuel costs?
- Who pays war-risk premiums?
- Are freight rates fixed?
- Can emergency surcharges be imposed?
- Does cargo insurance remain effective?
- Could Saudi pipeline disruption affect our supplier?
- Is inventory sufficient to absorb longer lead times?
- Are alternative suppliers outside the region available?
- Are those alternatives genuinely independent?
- Could critical products move by air?
- Are contract delivery dates flexible?
- Do force-majeure clauses address route disruption?
The key question has changed.
It is no longer simply:
“Can we avoid Hormuz?”
Businesses must now ask:
“If we avoid Hormuz, is the alternative route actually still available?”
Risk Indicator: SEVERE – RED SEA, ENERGY & GLOBAL SHIPPING
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The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
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