Cost of living concerns have been heightened by the ongoing tensions between the United States and Iran. The Iranian government is considering closing the Strait of Hormuz, a move that could severely impact the economies of Western countries.
The uncertainty surrounding the status of the Strait of Hormuz, a vital trade route that has been mostly closed off by Iran, has led to soaring prices of crude oil and related products like gasoline. Peace negotiations are scheduled to resume in Islamabad, Pakistan, today, but both sides are displaying strength.
Iran holds strategic control over the Hormuz strait and also has influence over the Bab el-Mandeb Strait, known as the “Gate of Tears.” The latter has become an essential alternative shipping route while the Hormuz strait remains inaccessible. However, the Bab el-Mandeb Strait, located off the coast of Yemen, is under the control of Iran-aligned Houthi rebels who have threatened to block it.
According to a UK intelligence report, Iran still possesses a significant arsenal of ballistic missiles and drones. The report emphasizes the importance of the Bab el-Mandeb Strait as a key route for global trade, especially for oil shipments between the Gulf, Europe, and Asia. Yemeni officials have indicated that closing the strait is a possible option if the situation escalates.
Experts warn that if the Bab el-Mandeb Strait is closed, it could have severe implications for the global economy, particularly affecting major oil exporters. Any disruption similar to what occurred in the Strait of Hormuz could significantly impact regional countries like Saudi Arabia, which heavily rely on these shipping routes for crude oil exports.
Noam Raydan, a senior fellow at The Washington Institute for Near East Policy, highlighted the potential repercussions of a closure, stating that it would add pressure on the global economy and hinder the movement of various commodities through critical maritime chokepoints in the region.