Iran's ambassador to China denied Tehran's involvement in the Houthi blockade of the Bab el-Mandeb strait, calling for a root-cause resolution to the Yemen crisis as crude oil holds above $85 a barrel and shipping costs surge across three critical waterways.
Iran's ambassador to China said Tuesday that Tehran is not involved in the Houthi blockade of the Bab el-Mandeb strait, as crude oil held above $85 a barrel and tanker rates surged across three critical shipping routes simultaneously for the first time since the war began.
"Iran will not intervene in any actions taken by the Houthis in the region, nor does it have any interest in allowing tensions and conflict to continue," Ambassador Mohammad Fazri said, according to state media. He called for resolving the Bab el-Mandeb issue by addressing the root causes of the conflict between the Houthis and Saudi Arabia, which has spiraled into open hostilities over the past two weeks.
Brent crude traded at $85.49 a barrel Monday, down 6.8% from last week's highs, as the U.S. paused its bombing campaign against Iran for a third consecutive day. West Texas Intermediate fell 7% to $83.06. The lull in fighting followed 13 straight nights of U.S. strikes on Iran, which began after a ceasefire agreed to in mid-June collapsed in early July.
The Houthis imposed a blockade on Saudi Red Sea ports last week after Saudi Arabia attacked their infrastructure in Yemen, triggering a sharp drop in shipping through the Bab el-Mandeb. Only 11 commodity ships transited the strait Sunday, the lowest level in months, according to shipping intelligence firm Kpler. The disruption compounds an already severe bottleneck at the Strait of Hormuz, where Iran has effectively blocked normal shipping since late February, and rising risks in the Black Sea from Ukrainian attacks on Russian-linked vessels.
Shipping costs surge across three chokepoints
The simultaneous disruption at three major maritime chokepoints has driven tanker rates to levels not seen since the early days of the U.S.-Iran war, according to Lloyd's List. Spot rates for very large crude carriers and suezmax vessels have surged as insurance premiums climb and ship owners seek alternative routes, creating bottlenecks that further drive up costs.
"All of this is happening at once, and the various tanker markets are interacting with each other," wrote Lloyd's analyst Greg Miller. "Everything is connected in ocean shipping."
The Strait of Hormuz handles about 21% of global oil trade, while the Bab el-Mandeb is the southern gateway to the Red Sea and the Suez Canal. Iran and Oman have been holding talks aimed at establishing a joint mechanism to manage shipping through the strait, with Iranian officials describing the discussions as constructive. But Tehran has insisted there is no direct dialogue with the U.S., and Iran's deputy foreign minister said Tuesday that Tehran rejected a U.S. proposal during recent negotiations in Islamabad that contained "extreme demands."
Diplomacy hangs in the balance
President Trump expressed optimism about the talks Monday but warned that if no deal is reached, the U.S. would "go back to doing what we were doing" — striking Iran. He said he has "plenty of time" for diplomacy but added that "either it goes fast or not at all."
The last time the Bab el-Mandeb faced a sustained blockade by the Houthis during the Gaza war in 2023-2024, shipping traffic through the Red Sea fell more than 50% and container rates tripled before stabilizing after months of naval patrols. The current disruption involves both oil tankers and container ships, with the added complexity of simultaneous gridlock at the Strait of Hormuz.
Iran's military warned Tuesday that it "will not leave any threats unanswered" after Trump's comments, while Saudi Arabia, Jordan, Iraq and Qatar reported intercepting drones Monday and Tuesday, with Saudi Arabia and Qatar blaming Iranian-backed militias in Iraq for the attacks.
This article is for informational purposes only and does not constitute investment advice.
