Brent crude prices surged more than 1% to $102.40 per barrel on Monday following reports that Houthi forces have taken control of the Yemeni Red Sea coastal city of Al-Mukha, intensifying concerns over the safety of a vital global energy artery.

According to three Yemeni government sources and military officials cited by international media on Sunday, the Houthi group has secured the city and is advancing toward the Al-Dhubab area, aiming to gain control of Yemen's entire Red Sea coastline. Both locations sit near the northern entrance of the Bab el-Mandeb Strait, the strategic waterway that connects the Red Sea to the Gulf of Aden and serves as a crucial passage for Gulf crude oil shipments heading to Europe via the Suez Canal.

As the Houthi advance brings them closer to this pivotal chokepoint, market anxiety over potential disruptions to energy transportation has escalated, pushing benchmark oil prices higher in early trading.

Rising Risks on the Bab el-Mandeb Strait

The Bab el-Mandeb Strait is a cornerstone of global energy and trade flows, channeling Gulf crude, fuels, and other commodities northward through the Red Sea, where they can transit the Suez Canal or Egypt's SUMED pipeline into the Mediterranean, with additional volumes routing toward Asia.

Should maritime security deteriorate further, shipping companies may be forced to reroute vessels around the Cape of Good Hope, a detour that would significantly inflate transit times and fuel expenses while driving up shipping risk premiums. For the oil market, the real impact extends beyond whether the waterway formally closes; rather, it lies in the diminished transport efficiency and mounting costs of insurance, freight, and security that accompany heightened risk profiles.

Meanwhile, the threat to the Strait of Hormuz remains unresolved. If both the Bab el-Mandeb and Hormuz were to face severe simultaneous disruption, Gulf energy exports would come under intense strain, further exposing the fragility of the global energy supply chain.

Conflict with Saudi Arabia Rages On, Keeping Supply Disruption Premium Weighed In

The military confrontation between the Houthi group and Saudi Arabia continues unabated, with heightened attacks reported in recent days.

On Sunday, Saudi Arabia's Saudi-led coalition spokesperson Turki Al-Malki stated that Houthi forces had launched ballistic missiles and drones at multiple locations across the kingdom, including the cities of Khamis Mushait, Abha, and Jazan. The day prior, the coalition reported that strikes on civilian and economic infrastructure in Abha, Jazan, and Najran had left 73 civilians injured, among them women and children.

Should hostilities intensify further, spillover effects on regional stability could lengthen, with expectations of supply interruption, escalating transport costs, and geopolitical risk premiums likely to remain key support factors for crude oil and other commodity prices ahead.