Iran Orders Houthis to Seal Bab el-Mandeb if Trump Bombs Power Grid

The last functioning bypass for global oil is now the explicit next target.

Key takeaways

• Iran has asked Houthi forces to stand ready to close the Bab el-Mandeb Strait if the U.S. strikes Iranian power infrastructure, per a Reuters exclusive citing three sources.
• Trump publicly threatened on July 15 to bomb Iran's power plants and bridges "next week" unless Tehran returns to the negotiating table, making the trigger condition explicit.
• A simultaneous disruption of both Hormuz and Bab el-Mandeb would put roughly 25% of global oil and gas supply at risk and collapse Saudi Arabia's Yanbu bypass route, the only relief valve keeping oil below vertical since February.

Iran has asked Yemen's Houthi movement to stand ready to close the Bab el-Mandeb Strait if the United States strikes Iranian power infrastructure, per a Reuters exclusive citing two senior Iranian sources and one regional source familiar with the matter. The request has been conveyed to Houthi allies and discussed within Iran's leadership. It has not been officially confirmed by Tehran or the Houthis, both of whom were not immediately available for comment, the standard sourcing condition for intelligence-grade diplomatic scoops.

The trigger is not hypothetical. On July 15, President Trump told Fox News's Trey Yingst: "Next week it gets really bad for them because next week comes the power plants. Next week comes the bridges. We're going to knock out all their power plants. We're going to knock out all their bridges unless they get to the table and negotiate." Reuters also reports that Houthi missiles and drones have already been deployed near Bab el-Mandeb, with IRGC representatives in Yemen controlling the timing of any closure order.

The Bypass Is Now the Target

The Strait of Hormuz has been largely disrupted since U.S.-Israel strikes on Iran began February 28, 2026. EIA data shows Hormuz flows dropped from roughly 20.4 million barrels per day to approximately 14.6 million barrels per day in Q1 2026, a drop of nearly 30%. The Dallas Fed and a Congressional Research Service report both flagged the cascading supply effects of that disruption in the months following.

Saudi Arabia absorbed the initial shock by activating the East-West Pipeline at full 7-million-barrel-per-day capacity, routing roughly 70% of its energy exports through the Red Sea port of Yanbu instead of through Hormuz. That reroute kept oil from going vertical in the immediate aftermath.

Bab el-Mandeb is where those Yanbu exports exit into global markets. Closing it doesn't add to the Hormuz problem; it eliminates the workaround entirely. Analysts estimate a simultaneous disruption of both chokepoints would put roughly 25% of global oil and gas supply at risk, per ORF Middle East's dual-chokepoint analysis. There is no third bypass.

Torbjorn Solvedt, principal Middle East analyst at Verisk Maplecroft, put it plainly via Reuters: "If fighting intensifies and spills over into Red Sea export infrastructure and shipping, it will threaten the only major alternative route for oil exports from the region."

Nadwa Al-Dawsari of the Middle East Institute added: "This threat should be taken seriously. With recent escalation and U.S. strikes on Iran, Tehran has already signaled that the Bab al-Mandab could become part of its response."

Brent crude has risen significantly since the conflict began. War-risk insurance premiums are reported to have soared dramatically over the same period.

What the Math Actually Looks Like

Iran's strategy is legible: construct a dual-chokepoint trap where any escalation by the U.S. triggers an automatic, near-instantaneous energy supply shock at a scale no strategic petroleum reserve release can offset.

The Hormuz closure removed roughly 6 million barrels per day from normal transit. The Saudi East-West Pipeline absorbed part of that, but Saudi Arabia's Yanbu exports, 70 to 75% of its total, are directly exposed to a Bab el-Mandeb blockade. The IEA estimates Hormuz alone handles roughly 20% of global seaborne oil. Bab el-Mandeb, under current crisis-rerouting conditions, is carrying approximately 7% of global energy supply on top of that. The overlap isn't additive in a clean accounting sense, but analysts modeling a simultaneous closure land at 25% of global oil and gas under simultaneous threat.

That is the energy shock that breaks the Fed's already constrained policy space. Sticky inflation from the Hormuz disruption is already complicating rate decisions. A second supply shock spikes CPI further, stalls growth, prevents cuts, and balloons fiscal deficits in real terms. The war premium on every hard asset in the world resets higher. Prior TFTC coverage of the Hormuz closure and the NYK Line CEO's assessment that Hormuz would remain below half-capacity for months laid out the structural damage before this Bab el-Mandeb escalation was even on the table. That context makes the Reuters reporting more alarming, not less.

Andreas Krieg of King's College London described the Bab el-Mandeb threat as "another nuclear option" for Iran, one deployed only if the IRGC concluded all-out war was unavoidable.

What to Watch

The trigger is Trump's threatened power-plant strikes, which he placed "next week" on July 15. If those strikes proceed, the Houthi closure order is live. A ceasefire or verified negotiation breakthrough before strikes land is the primary scenario that dissolves this pressure; the Saudi-Tehran diplomatic channel is the one to watch for early signals. The secondary question is capability: U.S. and Saudi interdiction of Houthi missile and drone positioning at Bab el-Mandeb could neutralize the threat before it executes, keeping this rhetorical rather than kinetic. Maersk had resumed Red Sea transits as of July 9, that calculus changes immediately if the strait closes.

Update, July 25, 2026

The theoretical scenario this article described is now executing in real time. Houthi rebels struck two Saudi oil tankers, Encelia and Layla, with drones and missiles, in what marks the first confirmed attack since the group announced a naval blockade against Saudi Arabia.

The Houthis subsequently claimed to have hit both vessels; Saudi Arabia acknowledged at least one was struck and retaliated with airstrikes against Hodeidah, the main port under Houthi control.

The Red Sea attacks now directly threaten the millions of barrels per day the Saudis rerouted through the Petroline pipeline to Yanbu, their only working bypass of Hormuz, with those exports transiting Bab el-Mandeb to reach global markets. The bypass is no longer theoretical collateral damage; it is the target. Crossings through the Strait of Hormuz fell 31% day-on-day as of Tuesday per Kpler data, while those through Bab el-Mandeb fell 34%. Markets priced it immediately: Brent futures climbed more than 7% Thursday, breaching $100 per barrel and touching an intraday high of approximately $101 before settling at $100.69.

Brent has since pulled back to the $90s after briefly trading above $100.

On the diplomatic track, the U.S. appeared to pause its 13-day campaign of daily overnight strikes against Iran.

Trump stressed that U.S. officials are actively negotiating with Iran, though he said it remains possible the military continues its bombing campaign or delivers "a heavier dose," adding that Iran seems to be getting "more serious" in ongoing talks.

Windward tracking data adds one notable wrinkle: enforcement at Bab el-Mandeb appears calibrated to vessel affiliation rather than cargo, meaning the blockade is shaping who moves Saudi crude, not necessarily whether it moves at all. That distinction will matter a great deal if commodity desks are right that spreading "strait chaos" across the Gulf and widening disruptions to regional energy flows could drive further crude upside if the conflict persists , per warnings from JPMorgan, RBC, and Goldman Sachs this past week.

Update, July 26, 2026

The airstrike pause that Trump briefly acknowledged last week has now stretched to a second consecutive night, and it carries a harder institutional rationale than diplomatic preference. Vice President JD Vance and Joint Chiefs Chairman General Dan Caine advised Trump to pause military action due to concerns over depleted American ammunition reserves.

While Caine said the military could successfully execute the president's options, he cautioned that a prolonged campaign could affect U.S. weapons stockpiles. That is a logistics constraint, not a posture change, but it creates a window Oman is moving to fill.

Iranian and Omani deputy foreign ministers held talks Friday and Saturday focused on "common principles and operational mechanisms" to ensure safe shipping passage while respecting the sovereign rights of both states, with Iran's Foreign Ministry spokesman Esmaeil Baghaei describing the negotiations as "useful" and saying progress had been made.

A four-day lull in Iranian attacks on commercial shipping in the strait was seen by U.S. officials as an opportunity to resume diplomatic talks and dial down the war. On the Hormuz traffic picture, daily vessel crossings through the strait had fallen by approximately 70% as of July 23 per Kpler, dropping from a truce-period average of 45 ships to just 13 per day.

The off-ramp remains narrow. The IRGC fired warning shots at six vessels over the past 24 hours as they attempted to transit the strait, with Iranian state television reporting the ships were halted after allegedly straying "outside the designated route" set by Tehran.

Mediators say Washington and Tehran are exploring ways to restore a temporary ceasefire and ease restrictions on commercial shipping, but tensions remain high, with [Israeli Prime Minister] Netanyahu's planned visit to Washington adding uncertainty and the U.S. continuing naval operations against Iranian ports. The Fox News live feed flags that Netanyahu's Washington visit this week could determine whether Israel re-enters the strike campaign, which would reset the entire calculus the Oman channel is trying to work around.

Update, July 27, 2026

The bilateral pause is now confirmed at the DoD level. A senior Iranian official told Reuters that Iran will halt its own attacks as long as the U.S. maintains its latest pause, after the Pentagon abruptly suspended the campaign late Friday with no U.S. attacks reported on either Saturday or Sunday.

Iran, which had been following each night of U.S. attacks with its own strikes on neighboring countries hosting U.S. bases, has also held fire for two days.

The official said both countries want to return to the interim ceasefire deal and that a compromise being negotiated centers on having Iran run vessel transit through the Strait of Hormuz with fewer restrictions on ships.

The pause lands in one of the most data-heavy weeks of the year. Federal Reserve Chair Kevin Warsh and his colleagues face complex challenges as they gather for the July 28-29 FOMC meeting, the highlight of this week's economic calendar.

The July decision does not arrive in isolation: the Bureau of Economic Analysis is scheduled to publish the advance estimate of second-quarter GDP together with the PCE price index at 8:30 a.m. ET on July 30, the morning after the decision.

As of July 24, CME FedWatch showed a 64.2% probability the Fed holds this week, down from 87.2% on July 17 , meaning the war premium that drove Brent above $100 is already bleeding into rate-path repricing ahead of the meeting.

The complication for Warsh is that the ceasefire data and the inflation data are running in opposite directions simultaneously. The recent energy resurgence is unlikely to be seen in the current PCE series, meaning the next data set before the September meeting will draw greater attention, though the direction of travel is already clearly toward a September move. In plain terms: the PCE print this week will reflect the brief June ceasefire calm, not the $100-plus Brent spike. The Fed will have to decide policy against a backward-looking inflation gauge at the precise moment a geopolitical off-ramp is either solidifying or collapsing, with Netanyahu's Washington visit Tuesday as the next variable that could break either outcome.

Update, July 29, 2026

The blockade has shifted from kinetic harassment to institutional architecture. Yemen's internationally recognized government accused the Houthis Wednesday of working under Iranian guidance to establish a formal system for imposing fees on ships transiting the Red Sea and the Bab al-Mandab Strait.

Information Minister Moammar al-Eryani said the assessment came from recently obtained "confirmed intelligence," adding that "IRGC experts and advisers are directly involved in designing the technical and administrative framework of the project."

The plan includes "the establishment of a dedicated entity responsible for collecting payments from shipping companies and commercial vessels."

The structure mirrors Tehran's own contested toll regime at Hormuz precisely. Iran has insisted on its right to collect tolls on ships using Hormuz, which previously carried one-fifth of the world's crude oil and liquefied natural gas.

Growing anxieties across the Gulf center on the Houthis copying that playbook by monetizing access to Bab al-Mandeb, a move likely to send world energy markets into further disarray.

Chinese ships would be exempted from the fees under the arrangement, and China has held direct talks with the Houthis to enable its tankers to sail through the southern Red Sea without being attacked.

The operational groundwork was laid earlier this month. Iran flew IRGC commanders, military advisers, and missile- and drone-related equipment into Yemen, according to four sources including two Iranian sources, Yemen's information minister, and a regional security analyst, on a flight from Tehran on July 13.

While the Houthis do not control the part of Yemen's coastline directly along Bab el-Mandeb, they hold territory less than 100 kilometres away. The toll system, if operationalized, converts that geographic proximity into a permanent revenue mechanism -- not a one-time closure threat but an ongoing tax on the only working bypass left in the global oil supply chain.

Update, August 5, 2026

The Houthis have extended their operational reach to the northern Red Sea. Houthi spokesperson Yahya Saree announced the group would target Saudi oil tankers in the northern Red Sea, saying the move was a direct response to Saudi Arabia diverting ships away from the Bab el-Mandeb chokepoint to the south. The tactic confirms what the Windward data from the July 25 update flagged: Saudi operators were attempting to route around the blockade rather than submit to it. The Houthis just closed that escape valve.

The group claimed responsibility Wednesday for a missile strike on the Saudi-flagged oil tanker Wafa, with Saree saying the vessel was hit with several ballistic missiles in the northern Red Sea off the coast of Yanbu.

The Wafa, a chemical and product tanker built in 2014, was last recorded attempting to transit Bab el-Mandeb in July and may have altered course after the blockade announcement. Yanbu is the terminus of the Petroline bypass. Striking a tanker in its immediate approaches is not an abstraction about chokepoint risk; it is targeting the bypass infrastructure itself.

The tempo is accelerating. On Tuesday, August 4, the India-flagged dhow Faize Noore Oliya was also hit in the Red Sea, later capsizing and sinking, though all crew were rescued by Yemeni authorities, with the Houthis thought to be behind that attack as well.

With the Houthis disrupting vital shipping across the Red Sea, Saudi Arabia is now reported to be forming a naval coalition to restore order in the waterway. Whether that coalition can secure a corridor that now spans from Bab el-Mandeb in the south to the waters off Yanbu in the north is a different question entirely.

Sources

• Reuters exclusive: Iran asks Houthis to stand ready to close Bab el-Mandeb
• Trump Fox News interview, July 15, 2026, power plant threat
• EIA World Oil Transit Chokepoints
• Dallas Fed: Hormuz closure and global oil impact
• Congressional Research Service: Iran Conflict and the Strait of Hormuz
• ORF Middle East: Double Chokepoint, Hormuz and Bab el-Mandeb closure impact
• IEA: Strait of Hormuz oil security