The expanding conflict in Iran has thrust the Houthis back into the spotlight as a major disruptor of global trade. The Red Sea has become ground zero in this evolving crisis, where AIS-derived traffic patterns and real-time physical trade flows reveal the full extent of the disruption. After more than a year of sustained attacks, the Houthis' geopolitical influence has reached new heights following the effective closure of the Strait of Hormuz and further transforming a regional threat into a global supply chain crisis.
Hormuz: Where Supply Breaks
The sharpest disruption of this crisis is centered on Hormuz. In early February 2026, approximately 148 vessels transited the strait per day. By March 1, that figure had fallen to 32, and by March 2, to just 10 vessels per day, according to aggregated AIS monitoring.
Dozens of tankers were immobilized inside the Gulf, forming a growing backlog of stranded tonnage. By March 6, at least 24 laden product tankers had declared outbound drafts but remained unable to depart. Cargoes included naphtha and jet fuel anchored north of the strait, fully loaded with destinations they could not reach.
Crude flows exhibited the same paralysis. Middle East crude exports declined from 18.7 million bpd in early February to 5.9 million bpd by early March, a near 60% collapse based on loading programs and sailing confirmations. Roughly 90 tankers were stranded across regional waters, while 52 early March loadings never sailed. This growing “dead fleet” simultaneously removes supply and active tonnage, tightening freight availability and amplifying the physical squeeze.
Red Sea: Pressure Without Collapse
By contrast, traffic through Bab al Mandab and the Suez Canal adjusted rather than shut down. East-to-west CPP flows partially redistributed between Suez and the Cape of Good Hope, with Suez remaining the dominant corridor despite a clear month‑over‑month decline in transits.
On the crude side, Saudi Arabia rapidly reconfigured export routes. Loadings at Yanbu rose from roughly 735,000 bpd pre-conflict to over 3.0 million bpd, reflecting a deliberate reduction in Hormuz exposure. The Red Sea remains navigable for risk tolerant operators, but these structural reroutings signal deeper concerns over corridor reliability rather than immediate closure. This relative resilience is not accidental. Armed security teams have long been standard for many vessels transiting Bab al Mandab, reflecting an industry accustomed to mitigating chronic security risk rather than avoiding the corridor outright.
The Global Reconfiguration
With MEG flows constrained and Saudi exports partially rerouted, global energy markets have entered a rapid but reactive realignment.
1. Europe Turns to North America
Europe is backfilling lost MEG and Asian distillates with long‑haul North American supply.
Early April GO/ULSD finished‑product totals to Europe (Wood Mackenzie):
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873,555 MT from the US Gulf Coast
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231,385 MT from the US Atlantic Coast
These replacement flows underpin persistently high European diesel prices, frequently above €2.00/L, driven by a combination of different factors:
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The redirection of 3.6 million MT of MEG and Indian distillates eastward
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A 76.7% collapse in Baltic diesel exports
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Heavy reliance on premium US imports
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Compounding crude disruptions linked directly to Hormuz
To sustain refinery throughput, Europe has also sharply increased crude imports, having 1.41 million bpd of US crude on the closing week of April 1st. Canadian crude loadings are up 16% to 1.019 million bpd, with growing flows into Germany and Ireland. These volumes have allowed European refineries to maintain output, particularly gasoline and fuel oil, despite diesel tightness.
2. Europe Exports Gasoline and Fuel Oil East
While diesel remains scarce, Europe is exporting surplus of Gasoline (UMS) and Fuel Oil (FO) eastward.
UMS exports east of Suez surged 79.7% week-over‑week to 591,685 MT, primarily to Pakistan and South Africa. This coincides with soft or declining gasoline prices across Europe, reflecting oversupply and weak transmission of crude volatility.
FO exports have also accelerated, Singapore absorbed 336,260 MT of European fuel oil, with additional flows to Ain Sukhna, Houston, and Rotterdam. Fuel oil pricing continues to track refinery throughput rather than crude, remaining loose amid strong North American feedstock inflows.
3. Asia Pulls North American Crude
Asia mirrors Europe’s strategy.
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1.41 million bpd of US crude flowed to Asia over the same period
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India and East Asia dominated receipts
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East Asia emerged as the largest destination for Canadian West Coast crude
At the same time, Asian markets retain regional distillates internally, consolidating MEG and Indian gasoil eastward rather than allowing traditional westbound flows.
A Dual Disruption: Houthis and Hormuz Reshape Global Energy Flows
The global energy system is navigating two simultaneous chokepoint disruptions. The Houthis have sustained attacks on Red Sea shipping since late 2023, initially linked to the Gaza conflict. Now, the effective closure of the Strait of Hormuz has amplified their geopolitical leverage. The result: a crisis defined not by one blockage, but by compounding constraints across two critical maritime corridors.
Europe's Historic Realignment
Since March 2026, European product markets have fundamentally restructured. Middle East distillate flows that historically moved west now stay east of Suez. Combined with collapsing Baltic exports, Europe faces a structural diesel deficit. Diesel prices remain elevated. Gasoline, by contrast, is oversupplied and soft. Fuel oil tracks refinery utilization.
Europe has adapted by importing crude and finished products from North America while exporting surplus gasoline and fuel oil to Asia and Africa. Refined product prices no longer track crude volatility, they reflect regional supply imbalances.
Asia Absorbs the Surplus
Asia is now the release valve. The region is absorbing Europe's excess gasoline and fuel oil alongside record volumes of North American crude. This rebalancing has created new trade patterns that are visible in AIS data and physical cargo movements.
Scenario: Full Red Sea Closure
A complete Houthi-driven Red Sea closure would compress global supply toward the few remaining flexible exporters: the United States and Russia. These producers would be forced to backfill Middle East Gulf volumes, redirecting flows simultaneously to Asia and Europe.
This would:
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Elevate global prices across all products
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Deepen geopolitical instability within the Middle East Gulf
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Draw additional nations into the conflict as supply disruptions widen
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Create selective opportunities for emerging producers in the Americas, Africa, and APAC; but within a fragmented, high-volatility environment
The Asymmetry That Matters
Even if Red Sea transit stabilizes, a constrained Hormuz defines the baseline. Freight rates, delivery lead times, and refinery margins remain the most immediate transmission mechanisms. These are the first variables to break and the clearest signals for how the crisis moves from geopolitical event to economic impact.
What This Means:
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Diesel remains structurally tight in Europe. Importers should expect sustained premiums.
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Gasoline oversupply persists. Refiners face margin pressure on light ends.
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Crude flows are being redrawn in real time. AIS and cargo-level data are essential to tracking exposure.
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Chokepoint risk is now a portfolio variable. Energy buyers and traders must model dual-disruption scenarios, not isolated events.
What began as a regional security threat has become a structural market condition. The Houthis didn't close the Red Sea, but they changed how the world routes energy. Hormuz did the rest.
