A simultaneous disruption at the Strait of Hormuz and Bab-el-Mandeb could push Brent crude to $130–135 a barrel and deepen credit stress for Indian companies through higher energy, freight, insurance and working-capital costs, CareEdge Ratings said.
West Asian tensions now extend from Hormuz to the Red Sea. Iran has instructed the Houthis to prepare for closure of Bab-el-Mandeb if the US strikes critical Iranian infrastructure, while attacks on Saudi oil vessels have been reported.
“A simultaneous closure of the Strait of Hormuz and the Red Sea, even for a few weeks, could trigger a sharp surge in global energy prices, with Brent crude potentially rising to $130–135 per barrel and LNG supplies across Asia and Europe coming under significant strain,” said Priti Agarwal, Senior Director, CareEdge Ratings.
The agency estimates Brent at $95 a barrel under partial disruption, $120 under a four-week full closure and $135 if both routes remain shut for eight weeks. Brent had earlier climbed from around $70 to nearly $115, eased towards $70 and has since returned to about $100.
Maritime Traffic Patterns
Maritime traffic data showed 53 confirmed vessel crossings across the two chokepoints on July 28. Hormuz recorded 12 transits, up 50% from the previous day, while Bab-el-Mandeb registered 41 crossings, an increase of 5%.
Traffic through Hormuz remained concentrated, with 10 of the 12 vessels using the Iranian Unilateral Scheme and none using the Hormuz Traffic Separation Scheme. Bab-el-Mandeb recorded four dark transits, four sanctioned-vessel crossings and eight shadow-fleet movements, indicating that commercial traffic continues but vessel routing and transparency remain central operational and geopolitical risks.
“It is difficult to speculate how high they can go. It could be $100-plus or even $120. However, the increase in crude is not as fast as some of it has been factored in by markets, as the crisis is continuing and alternative avenues had already been explored and are being reactivated,” said Manas Majumdar, Leader, Oil & Gas, Fuels & Resources, PwC India.
Severe Impact on Indian Trade
Around 40% of India’s crude imports, along with a significant share of LNG and LPG supplies, pass through Hormuz. The Red Sea carries roughly 50% of India’s exports and 30% of its imports. Cape of Good Hope diversions could add 4,000–6,000 nautical miles and up to 20 days to voyages.
“The ongoing West Asian conflict and emerging dual chokepoint risks may create renewed credit pressure for Indian corporates by elevating input costs, disrupting supply chains and weakening operating cash flows,” said Puneet Kansal, Director, CareEdge Ratings.
J.P. Morgan analysts said Brent could average $94 if the conflict is contained to one month. Each additional month could add $7–8 a barrel, lifting the monthly average to about $114 if disruption extends to three months.