Houthi attacks in the Red Sea have eased in recent weeks but haven't stopped oil tankers from moving through the region. A prediction market now gives a 20% probability that the Bab el-Mandeb Strait will be effectively closed by September 30.
Houthi Attacks: Slower but Still a Threat
Yemen's Houthi rebels have been targeting commercial vessels in the Red Sea since late 2023, forcing many shipping companies to reroute around the Cape of Good Hope. The pace of attacks has slowed, but the group still poses a risk. Oil shipments continue, though at a reduced volume compared to before the campaign began. The strait, a narrow chokepoint between Yemen and Djibouti, is critical for crude and refined products heading to Europe and North America.
What the Prediction Market Says
Traders on a prediction platform have priced in a one-in-five chance that the Bab el-Mandeb will be closed by the end of September. That's a notable bet, but not a dominant one. The market's odds reflect uncertainty about whether the Houthis can sustain their campaign or if international naval patrols will keep the waterway open. The 20% figure has held steady for several days, suggesting no new information has shifted expectations.
What a Closure Would Mean
If the strait were to close, oil tankers would have no choice but to take the long route around Africa. That would add weeks to voyages and push up shipping costs. Insurance premiums for Red Sea transits have already risen. A full closure could send global oil prices higher, especially if it coincides with other supply disruptions. For now, the market is betting against that scenario, but the risk hasn't disappeared.
The next few weeks will be telling. The Houthis have shown they can still strike, and the September 30 deadline on the prediction market gives traders a clear date to watch. If attacks pick up again, those odds will climb.
