Yemen's Houthi militia has declared a maritime blockade against Saudi Arabia, threatening to cut off a critical oil shipping route at a moment when the Strait of Hormuz is already severely disrupted.

The Iran-backed group announced the move in a televised address, framing it as retaliation for what it described as Saudi Arabia's "oppressive siege" on Yemen, including blockades on Houthi-held ports. "The Yemeni Armed Forces declare a maritime embargo against the criminal Saudi enemy, based on the equation of 'an eye for an eye', effective immediately," the group said.

With Bab al-Mandeb being Saudi Arabia's gateway to the Asian market, experts warn that the costs of forcing ships to reroute will be astronomical.

More than 7 million barrels of oil per day — around 7% of global trade — passed through Bab al-Mandab, the southern entrance to the Red Sea, in June, according to data from Kpler. EOS has identified five Saudi-flagged vessels in the Gulf of Aden heading towards the strait and another five moving down the Red Sea.

The blockade declaration compounds existing disruption to global energy flows. Before the US-Iran war began on February 28, around 20 million barrels per day — a fifth of the world's oil supply — transited the Strait of Hormuz. Traffic recovered partially after Washington and Tehran struck a preliminary deal in mid-June but has since slowed sharply following a new round of strikes across the Gulf. The Hormuz disruption had already pushed Saudi Arabia to increase exports via its Red Sea port of Yanbu, shipments that now face their own complications.

Crude futures, which briefly topped $90 a barrel on Monday, settled at $88.27 following the announcement, while the US West Texas Intermediate benchmark edged down to $82.11. Prices steadied after mediators put a proposal to Iran for a 10-day ceasefire aimed at reviving last month's interim deal.

The Houthi move comes days after the group fired missiles at Abha airport in southern Saudi Arabia, breaking a truce in place since 2022. The Houthis said the strike was a response to a Saudi bombardment of Sanaa airport.

Analysts said the announcement alone could have significant consequences regardless of whether ships are actually attacked. Most analysts believe that even if no ships were attacked in the Red Sea, the announcement alone is likely to disrupt shipping and create uncertainty.

The Houthis previously barred US, Israeli and UK ships from Bab al-Mandab in 2023, later expanding their targeting to vessels calling at Israeli ports. Saudi Arabia's blockade of Houthi-held Yemen, imposed in 2017, has been described by the United Nations as a contributor to severe humanitarian conditions in the country. Reports last week indicated that Tehran had asked the Houthi movement to stand ready to close the Red Sea if the US struck Iranian power infrastructure.

With the signing of the memorandum of understanding in June, the US war in Iran was expected to ostensibly wind down. It has not, and from recent developments, the situation is looking far worse than what one would have expected a few days earlier. 

Yahya Saree, spokesperson for the Yemeni Armed forces, announced a maritime embargo against Saudi Arabia, effectively immediately, asserting that the Bab al-Mandeb Strait will be closed to Saudi maritime traffic. 

The strait, which sat at the heart of the global shipping landscape, now finds itself at the centre of the headlines. 

What are the key things to know about Bab al-Mandeb and why does it hold relevance in the geopolitical chessboard?

• The Bab el-Mandeb Strait is a narrow martime chokepoint that connects the Red Sea with the Indian Ocean via the Gulf of Aden.

• It is a 20-mile-wide, 70-mile-long strait with the countries of Eritrea and Djibouti to the west and Yemen on its eastern edge. 

• It gain further prominence after the opening of the Suez Canal in 1869, enabling intercontinental sea trade between Asia and Europe through the Red Sea and the Mediterranean Sea. 

• The Strait owes its name to the perils of navigating the constricted waterway. The Arabic name Bab el Mandeb means Gate of Tears or Gate of Grief. 

• Bab el-Mandeb Strait accounts for about one-tenth of seaborne oil trade, making it the third busiest chokepoint in global oil trade after the Strait of Malacca and the Strait of Hormuz. 

• Bab al-Mandeb is essential to Asia-Europe trade as the alternate Cape of Good Hope route increases transport times, fuel consumption, carbon emissions and insurance premiums. 

• An average of 9.3 million barrels of crude oil and petroleum liquids transited the waterway each day in 2023, before slipping to 4.1 million barrels per day in 2024 and 4.2 million bpd in the first half of 2025, according to the US Energy Information Administration.

• The closure of Bab al-Mandeb along with a full blockade of the Strait of Hormuz could put a quarter of the world’s oil supply out of commission. 

Turkish exports to the Gulf region jumped 41% year on year to $2.6 billion in June, as easing conflict boosted demand and buyers turned to Turkey to replace goods previously sourced from disrupted Chinese supply chains.

Shipments to GCC member states alone topped $826 million, up 35%, according to data from the Türkiye Exporters Assembly (TIM). Saudi Arabia was the largest GCC buyer, importing $425 million of Turkish goods — a 117% year-on-year increase — followed by the UAE at $295 million and Kuwait at $34.7 million, marginally ahead of Qatar.

"We anticipate that, should lasting peace be secured, a much more positive picture will emerge in the second half of the year," said Mustafa Gültepe, TIM president, adding that the current growth rate could be maintained or increased in coming months.

The shift away from Chinese suppliers was a key driver of the increase. "Supplies from China to Gulf countries was largely halted with the war, so naturally they turned to us for goods," said Ayhan Zeytinoğlu, chairman of the Chamber of Industry in the northwestern province of Kocaeli. "While our export focus is Europe, the rise in June is good news, especially as some Gulf countries only started working with us over the past few years. In this current environment, we could be seeing monthly export revenues from the region increase further."

Jewellery was the single largest product category in GCC-bound shipments at $106 million, followed by chemical products at $69 million and pulses and cereals at $59 million.

The GCC figures were outpaced by Turkish exports to Iraq and Iran, which together accounted for more than $1 billion in June — up 26% and 64% respectively on the same month last year. For war-damaged Iran, metals, dried foods and chemical products were among the most in-demand Turkish goods.

Renewed hostilities, however, remain a risk. TIM's optimism for the second half of the year is conditional on a durable peace settlement, with the potential for conflict to again disrupt trade flows in the months ahead.

Iraq recorded a fiscal deficit of $5 billion in the first four months of 2026 after the Iran war severely curtailed oil export revenues, heaping pressure on the new government to pass a budget it has yet to approve.

Spending over the period stood at $28.2 billion against revenues of $23.2 billion, according to the finance ministry. Oil revenues accounted for $19.4 billion of total income, with the remainder coming from customs duties and government fees. Civil servant wages were the single largest item of expenditure at $15.3 billion — more than half of all spending.

"There is a pressing need for the new government to work to release a full budget because the delay will hurt growth and projects," said Nabil Al-Marsoomi, an economics professor at Basra University. "The absence of a budget limits the government's ability to confront the financial crisis, as its approval provides legal cover for internal and external borrowing, as well as liquidity management through the central bank."

The revenue shortfall stems directly from the disruption to oil exports caused by Iran's near-closure of the Strait of Hormuz, which left Iraq pumping as little as a third of the roughly 3.4 million barrels per day on which last year's budget was based. The government has been spending at a monthly average of just over 8% of last year's total expenditure as a result.

Parliament has submitted a proposal for an emergency budget of between $14.9 billion and $22.4 billion to keep government offices running and protect already-awarded contracts. However, the cabinet of Prime Minister Ali Al-Zaidi, who took office in mid-May, has held only a handful of meetings and has yet to make a decision on a new budget.

OPEC has forecast global oil demand will climb from 105 million barrels per day in 2025 to 113 million bpd by 2030, calling for annual investment of more than $700 billion in the sector to meet long-term needs.

The projections were published in the group's 2026 World Oil Outlook, launched at the OPEC Secretariat in Vienna. The report sees oil demand rising to 119 million bpd by 2035 and 124 million bpd by 2050, with no peak in sight. Overall global energy demand is projected to rise 23% by 2050, driven by expanding economies in India, the Middle East, Africa and Latin America, as well as policy shifts in the US and Europe expected to favour continued oil consumption.

"For oil alone, investments of $17.7 trillion from 2026 to 2050 — or over $700 billion per annum — are needed to meet long-term demand," said OPEC Secretary-General Haitham Al Ghais, adding that the scale of global energy needs requires sustained investment across all energy sources and technologies.

The outlook lands at a volatile moment for energy markets. The Iran war earlier this year pushed oil prices as high as $120 a barrel in March, while a peace agreement announced by US President Donald Trump this week sent prices sharply lower. Brent crude was trading at $79.42 a barrel on Friday.

The report also noted a broader shift in the global energy policy landscape, with increased emphasis on energy security and affordability driving policy adjustments expected to support oil demand in the medium and long term.

The findings come as OPEC navigates a period of internal change. The UAE announced its departure from both OPEC and the wider OPEC+ grouping in April.

Iran’s central bank said it will release $2 billion in foreign currency for the industrial sector from Saturday, after gaining improved access to frozen overseas assets and benefiting from an easing of restrictions on oil exports under a temporary U.S.-Iran arrangement.

The move comes as Tehran tries to stabilize its economy, where foreign-exchange shortages have fed inflation and made it harder to pay for imports of essential goods.

Central Bank Governor Abdolnasser Hemmati said the bank would channel part of its stronger reserves into the economy, with the initial allocation aimed at supporting industrial imports and helping contain price pressures. The broader deal is tied to a 60-day U.S. sanctions waiver that allows Iranian crude and petroleum exports to resume more freely, while also improving access to some of Iran’s frozen funds abroad.

The timing matters because oil exports are Iran’s main source of hard currency, and any sanctions relief can quickly improve the central bank’s room to maneuver. However, the relief is temporary and does not amount to a full removal of sanctions, so the durability of the funding boost will depend on how the wider negotiations develop.

But it does highlight the geopolitical leverage embedded in oil sanctions. By loosening pressure on Iran’s export revenues, Washington has signaled a pragmatic willingness to test engagement, even as the broader confrontation over Iran’s nuclear and regional role remains unresolved.

The Financial Action Task Force (FATF) has placed Iraq on its grey list of countries with deficiencies in anti-money-laundering and counterterrorism financing laws, while keeping Kuwait on the list despite recent reforms. Algeria, by contrast, was removed after regulators acknowledged its progress.

The Paris-based watchdog, which met on Friday, said Iraq requires work on managing cash-related risks, increasing money-laundering and terrorist-financing investigations, and making better use of financial intelligence.

"Iraq has been added to the grey list as work is needed to tackle risks related to cash, increase money-laundering and terrorist-financing investigations and enhance the use of financial information," said FATF president Elisa de Anda Madrazo.

The listing comes as Iraq's new prime minister, Ali Al-Zaidi, who took office in May, has made economic rebuilding, foreign investment, and anti-corruption central to his agenda. In a related development, Al-Zaidi recently replaced long-serving central bank governor Ali Al-Allaq with Nizar Hussein, a former lawyer who previously headed the central bank's anti-money-laundering and terror-funding unit.

"This move will send a positive signal to the West. I also believe the central bank will pursue its plan to overhaul the banking sector," said Nabil Al-Marsoomi, an economics professor at an Iraqi university.

Iraq, OPEC's second-largest oil producer, has been working to restructure a banking sector weakened by bad loans and decades of corruption. Parliament passed the country's first anti-laundering and terror-financing law in 2015, and authorities received over 2,700 reports of suspected financial crimes in the first half of 2025 alone.

Kuwait, meanwhile, remains on the grey list despite closing nearly 73,700 companies that failed to disclose their beneficial owners and introducing a series of tighter financial regulations over the past two years. The Gulf state first enacted comprehensive anti-laundering legislation in 2013 under Western pressure, with penalties including fines and prison terms of up to ten years.

"The measures taken by Kuwait in the past period are the most drastic in many years. I believe it is a matter of time before Kuwait is removed from the FATF grey list," said Ali Al-Enzi, manager of Al-Manakh economic consulting centre in Kuwait.

Algeria's removal from the list follows progress in risk-based supervision, beneficial ownership transparency, and targeted financial sanctions. Key measures included a central bank circular banning cash deposits into corporate bank accounts, introduced in December, and tighter oversight of the gold and jewellery trade, where dealers are now required to report suspicious transactions immediately to Algeria's Financial Intelligence Unit.

FATF, founded in 1989 on a G7 initiative, publishes its black and grey lists three times a year. Algeria had been placed on the grey list in late 2024.