Rerouting Fragility And Second-Chokepoint Escalation Risk (Bab El-Mandeb / Red Sea) With Hard Constraints
Sources: 1 • Confidence: Medium • Updated: 2026-04-11 18:48
Key takeaways
- Rory Johnston warns that constriction or closure of the Bab el-Mandeb would be a major escalation because it would threaten the Red Sea route near Yanbu used for Hormuz-bypassing flows.
- As of the April 1 recording, the Strait of Hormuz remains closed while the U.S. and Israeli military campaign against Iran has entered its second month.
- Rory Johnston states that delivering a 400 million barrel release over 120 days would be about 3.3 million barrels per day of incremental supply flow.
- Rory Johnston reports that the Wall Street Journal said Trump is increasingly open to ending the Iran war without the Strait being reopened.
- Rory Johnston says Asian refiners cut run rates immediately after Hormuz halted to avoid being forced into refinery shutdowns from crude feedstock loss.
Sections
Rerouting Fragility And Second-Chokepoint Escalation Risk (Bab El-Mandeb / Red Sea) With Hard Constraints
- Rory Johnston warns that constriction or closure of the Bab el-Mandeb would be a major escalation because it would threaten the Red Sea route near Yanbu used for Hormuz-bypassing flows.
- Rory Johnston says a key open risk is whether the Houthis will begin targeting shipping and/or strike Yanbu port and related East–West pipeline infrastructure.
- Rory Johnston says blocking Bab el-Mandeb would force longer routes that more than double transit time to Asia, creating an effective near-term loss of supply due to time and shipping capacity constraints.
- Rory Johnston says the Saudi East–West Pipeline to Yanbu on the Red Sea is the primary rerouting offset if the Strait of Hormuz is blocked.
- Rory Johnston reports an analysis (attributed to Gregory Brew) that the Houthis are better understood as an ally with independent priorities rather than a proxy, and that their need for Saudi funding may constrain them from fully blockading Bab el-Mandeb.
- Rory Johnston says VLCCs cannot transit the Suez Canal and even Suezmax tankers typically cannot transit fully loaded, requiring partial offload into the SUMED pipeline, which he says has capacity just over 4 million barrels per day.
Realized Tail-Risk: Chokepoint Closure And Scale Of Missing Barrels
- As of the April 1 recording, the Strait of Hormuz remains closed while the U.S. and Israeli military campaign against Iran has entered its second month.
- Rory Johnston did not expect to see the Strait of Hormuz closed because it was widely treated as a low-probability scenario.
- Rory Johnston estimates that pre-war flows through the Strait of Hormuz were about 20 million barrels per day.
- Rory Johnston estimates that optimistic rerouting reduces the effective loss from the Hormuz disruption to roughly 13 million barrels per day.
- Rory Johnston argues the near-term net supply shortfall is a 5–7 million barrel per day deficit that must be absorbed by inventories after accounting for rerouting and temporary offsets.
Policy Response And Non-Price Rationing Under Constraints
- Rory Johnston states that delivering a 400 million barrel release over 120 days would be about 3.3 million barrels per day of incremental supply flow.
- Rory Johnston says in countries with fuel price caps or subsidies, an energy shock either causes immediate supply shortfalls if prices cannot rise or becomes a fiscal crisis if governments subsidize higher prices.
- Rory Johnston says the IEA approved a roughly 400 million barrel coordinated release, which he characterizes as the largest in its history, compared with about 182 million barrels in 2022.
- Rory Johnston asserts the U.S. eased sanctions on Russian and Iranian 'oil on water' to help draw down accumulated floating supplies.
- Rory Johnston reports some governments are implementing demand-management measures resembling COVID-era restrictions, including mandated work-from-home, four-day work weeks, and odd-even license plate rules.
Political Settlement Scenarios And Persistent Risk Premium Pathways
- Rory Johnston reports that the Wall Street Journal said Trump is increasingly open to ending the Iran war without the Strait being reopened.
- Rory Johnston expects the most likely near-term scenario is that Trump declares the conflict over and unilaterally pulls back U.S. naval assets after prices rise further.
- Rory Johnston expects that even if markets sell off on a de-escalation headline, prices could grind back higher as cumulative physical losses are recognized, with the futures curve becoming less backwardated.
- Rory Johnston forecasts that in a U.S. pullback scenario, Iran could maintain quasi-control over the Strait via tolling arrangements while allowing only partial flow (e.g., 50–60% of pre-war volumes).
- Rory Johnston estimates that a $2 million per-tanker transit toll would be about $1 per barrel for a 2 million-barrel VLCC.
Binding Constraint Shifts From Crude To Refined Products, Especially Middle Distillates
- Rory Johnston says Asian refiners cut run rates immediately after Hormuz halted to avoid being forced into refinery shutdowns from crude feedstock loss.
- Rory Johnston reports that Singapore jet fuel benchmarks briefly jumped above $200 per barrel early in the crisis.
- Rory Johnston reports that Asian diesel and jet fuel prices surged toward levels similar to the Singapore jet fuel spike.
- Rory Johnston claims middle distillates (diesel and jet fuel) are the tightest 'weak link' in the global petroleum system due to refinery retirements, crude-slate changes, and relatively inelastic demand versus gasoline.
Watchlist
- Rory Johnston warns that constriction or closure of the Bab el-Mandeb would be a major escalation because it would threaten the Red Sea route near Yanbu used for Hormuz-bypassing flows.
- Rory Johnston says a key open risk is whether the Houthis will begin targeting shipping and/or strike Yanbu port and related East–West pipeline infrastructure.
Unknowns
- What is the independently verified operational status of the Strait of Hormuz (closure details, enforcement mechanism, and actual throughput) during and after the April 1 recording window?
- What are the realized rerouting volumes via the Saudi East–West pipeline to Yanbu, and what constraints (security, capacity, port operations) are binding in practice?
- Do tanker-arrival patterns match the predicted regional timing of the 'final ship' and subsequent 'air pocket' (Asia, then Europe, then North America)?
- What is the actual cadence, composition, and deliverability of the reported coordinated strategic release (including where the barrels are located and how quickly they can be moved into the most constrained markets)?
- How large and persistent is the middle-distillate tightness relative to crude tightness, and how much is driven by refinery utilization cuts versus structural refining capacity constraints?