Will Bab el-Mandeb shipping transits recover to at least 80 percent of their pre-2024 baseline before the end of Q4 2026?
What moved
An Asia-bound Saudi oil tanker exited the Red Sea through Suez as others transit Bab el-Mandeb amid persistent Houthi threats; route choices are fragmenting, lengthening voyage times and raising transit insurance costs.
The market transmission
The Red Sea remains a corridor where individual tanker routing decisions are now split between the longer but perceived safer Suez passage and the shorter but threatened Bab el-Mandeb strait. This fragmentation is already lifting voyage duration and insurance premia for Asia-bound crude, with most of the cost absorption falling on charterers and eventually landed prices at Asian refineries. Spare tanker capacity and competitive spot rates are holding headline shipping costs down, so the real margin pressure shows up in insurance layers and schedule risk, not in Brent itself yet.
What would change this
The signal shows routing choice, not flow interruption. Bab el-Mandeb remains passable and some traffic accepts the risk rather than add 7-10 days via Suez. This is a cost escalation, not a supply loss, and the impact on refiner margins is material only where time value and insurance compound across a fleet. Brent has not repriced on Red Sea uncertainty alone; the channel is too liquid and the stint too short to shift global crude balances.