13 September 2026 · Sanctions, Energy Security & Regional Risk

Over the course of a single weekend, the map of maritime chokepoints across West Asia was redrawn. Iran’s grip on the Strait of Hormuz and the Persian Gulf has been joined by a Houthi takeover of the Bab al-Mandeb Strait, an Iraqi militia strike on Saudi Arabia’s main pipeline bypass, and a fresh round of Iran-US tanker strikes in the Gulf of Oman. Crude has broken above USD 100 a barrel and Treasury yields have pushed higher on inflation fears. The timing is not incidental: it lands the same week Iran’s president sat down with Narendra Modi in New Delhi for the BRICS summit.

Hormuz and the Persian Gulf: the blockade grinds on

Iran’s effective control over the Strait of Hormuz has been the defining feature of the conflict since Operation Epic Fury began in late February 2026. The past fortnight brought the sharpest exchange of maritime strikes since the war started. US Central Command has sunk or disabled a string of tankers it links to the Islamic Revolutionary Guard Corps’ oil-financing network, including strikes off Kharg Island, near Jask and in the Gulf of Oman, after the IRGC attempted missile attacks on US Navy vessels. Iran responded by claiming strikes on ten ships near the strait, and both sides have now hit vessels on either side of Hormuz in what analysts describe as the heaviest wave of attacks on shipping since the war began.

Flows through Hormuz, which carried around a fifth of the world’s oil before the war, have swung wildly, reportedly falling as low as 2 million barrels a day during the worst of the fighting after briefly recovering to 8-9 million bpd earlier in the summer. Iran continues to insist that ships use a route of its own choosing through the strait rather than treating it as an international waterway, and talks between Iran and Gulf Arab states over its future status remain unresolved. Due to the US commitment to the conflict, the biggest risk of destruction of the local energy infrastructure remains and is now probably higher than it ever was since the start of the US-Israeli war against Iran.

Bab al-Mandeb falls: the Houthi coastal offensive

While Hormuz has been contested for months, the weekend’s most consequential territorial change happened at the other end of the theatre. A week-long Houthi offensive down Yemen’s Red Sea coast culminated on Friday 11 September in the group taking Mayyun (Perim) Island, the volcanic outcrop that splits Bab al-Mandeb into its two navigable channels. Government forces withdrew rather than fight for it, and Houthi fighters were reported fanning out along the shoreline in military vehicles.

Credit: Institute for the Study of War

The island was not the only prize. Houthi forces also secured the Greater and Lesser Hanish islands and Zuqar, giving them all four of the strait’s strategic islands, together with the port of Mokha and the town of Dhubab on the facing coast. A Yemeni government military official said plainly that everything his side had held on the western coast had fallen. The offensive has reportedly cost several hundred lives and displaced tens of thousands of people in a single week, and government troops besieged on the Hanish islands were said to be appealing for relief and evacuation.

The Houthis, who already govern roughly four-fifths of Yemen’s population from their base in Sana’a, moved quickly to reassure international shipping that transit remains open to everyone except Saudi-flagged vessels, which they say are already banned. Given the group’s history of missile and drone attacks on shipping earlier in the war, that reassurance is being read in the market as conditional rather than durable. Live open-source tracking of the offensive, including the ground-operation map maintained by IranWarLive, recorded the Perim Island landing and the fall of Dhubab as the war’s most consequential territorial change to date. There are multiple reports of Houthi forces capturing abandoned Saudi military equipment.

Live updates are available through: IranWarLive – Ground Operation Tracker

The pipeline hit: Iraqi militias widen the front

On 10-11 September, drone strikes launched from Iraqi territory hit Saudi Arabia’s East-West Crude Oil Pipeline, the 1,200km conduit that lets Riyadh move around 4-5 million barrels a day from its Gulf fields to the Red Sea port of Yanbu, bypassing Hormuz entirely. Saudi Arabia shut the pipeline as a precautionary measure and said it would not retaliate immediately, giving Baghdad time to investigate. Iraq’s government confirmed the attack originated from its territory, closed a number of border crossings, and dismissed the military commander responsible for operations in Maysan province, where the drones are believed to have launched. An umbrella group of Iran-backed Iraqi militias denied responsibility while praising the Houthis’ battlefield gains.

Regional officials have told wire agencies that the Houthis and Iraqi militias have coordinated attacks on Saudi oil facilities in recent weeks, with the Houthis said to be sending advisers to Iraq and Iraqi militias sending technicians in return. The pipeline had, until now, absorbed a larger share of the burden of keeping Saudi oil flowing than the release of emergency reserves, according to Saudi Aramco’s own chief executive last month. Its closure strips out one of the few remaining Hormuz-independent export routes at the same moment the Red Sea route is falling under Houthi control.

Markets: crude above $100, yields under pressure

Oil prices broke back above USD 100 a barrel this week for the first time in months, closing more than 8 percent higher over the week as rumours of the pipeline strike circulated ahead of confirmation. The rally reflects the compounding effect of three separate supply threats landing at once: the Hormuz blockade, the East-West pipeline closure, and the loss of a secure Red Sea corridor. Saudi crude supply has reportedly fallen to its lowest level in more than three decades.

US Treasury yields have moved higher through the escalation, with the market increasingly pricing a longer period of elevated energy costs and reduced odds of near-term Federal Reserve rate cuts. Bond desks have been treating each new escalation, from the tanker strikes to the pipeline attack, as an inflation signal rather than a one-off shock, which is why the yield reaction has been sustained rather than transient.

Delhi: the BRICS backdrop

The military escalation played out against a striking diplomatic backdrop. Iran’s president, Masoud Pezeshkian, travelled to New Delhi for the 18th BRICS summit (12-13 September), where he held a bilateral meeting with Prime Minister Narendra Modi, his first visit to India since taking office. The two leaders reviewed bilateral ties, including the Chabahar port agreement, alongside Xi Jinping, Vladimir Putin and the rest of the bloc. The summit’s stated focus, on local-currency trade and integrating BRICS payment systems, is itself a response to the pressure that sanctions and tariff policy are placing on members such as Iran and Russia. Iranian state media also reported gatherings and public celebrations in parts of southern Iran and in Sana’a marking the Red Sea gains, framed domestically as a strategic win for the wider Iranian Axis of Resistance.

Why this matters for sanctions and insurance practitioners

• Marine war-risk and P&I exposure in the Bab al-Mandeb corridor has shifted from an intermittent missile/drone threat to a scenario where a non-state actor controls the physical chokepoint itself, with a stated (if contested) carve-out only for Saudi-flagged vessels.
• Loss of the East-West pipeline as a Hormuz bypass removes a key plank of Saudi Arabia’s sanctions-resilient export strategy and increases reliance on routes that are themselves now contested.

The views expressed in this article are the author’s own and do not represent the views or positions of any current or former employer.

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