This week, the Strait of Hormuz problem got a sequel. On July 13, Yemen’s government said it struck Sanaa airport to stop an Iranian aircraft from landing; the Houthi rebels who control the airport blamed Saudi Arabia instead, and declared the fragile 2022 ceasefire over. Missiles followed on both sides. It sounds like a separate story from the oil chokepoint headlines you’ve already seen this year. It isn’t.
Here’s the connection. Since the U.S.-Iran ceasefire broke down again in early July, Saudi Arabia has been rerouting a large share of its Hormuz-bound oil exports through the Red Sea instead — sending tankers out through the port of Yanbu and down through the Bab-el-Mandeb strait, right next to Yemen. That backup route runs along exactly the stretch of water the Houthis control the northern edge of, and exactly where the ceasefire that just ended was holding.
We’ve written before about why chokepoints like Hormuz move markets — a narrow strait means a small disruption in one spot can block a huge share of global oil flow. We’ve also covered how the Hormuz truce shaped investor expectations, and how having two chokepoints in play at once doubled the market’s nerves earlier this year. What’s happening now is those same mechanisms, with one extra twist: the “backup” route investors were counting on if Hormuz closed runs directly past a conflict that just reignited.
That’s the real lesson, and it’s bigger than the Middle East. A backup plan only reduces your risk if it can fail for a different reason than your main plan. If your main route and your backup route can both be shut down by the same regional conflict, you don’t actually have two routes — you have one route with two names.
My take: A backup only counts as a backup if it can fail on its own terms.
Not advice. Just how I see it.