A rebel group just grabbed a global chokepoint — your diesel bill should worry

In this excellent piece by Joan Swart, she provides the local context on the impact of Ansar Allah — the Houthis — seizing Mokha and Mayyun Island. In essence, this gives the rebels control of Bab al-Mandeb; at the same time, the Strait of Hormuz remains disrupted by the US/Iran war. This means two of the world's key oil chokepoints are both compromised at the same time. Saudi Arabia can't dislodge them; Washington, already stretched thin against Iran, refuses to intervene directly. The knock-on: shipping reroutes, higher freight and insurance costs, and renewed pressure on crude oil prices, layered onto a US debt pile over $40 trillion and rising Treasury yields. For South Africa, this translates into higher fuel and diesel costs (fishing, freight, mining, agriculture, backup power), testing Treasury's patience - and the rand..By Joan Swart.Something remarkable is happening in Yemen. In a rapid offensive, Ansar Allah, widely known as the Houthis in Western media, has swept along the country's western coast, capturing Mokha and advancing towards Bab al-Mandeb. It has also taken Mayyun Island, or Perim, which sits in the middle of the strait and divides its two shipping channels. Saudi-backed forces have withdrawn, leaving Ansar Allah in control of much of Yemen's western coastline and in an unprecedented strategic position overlooking the Red Sea.The significance goes far beyond another change in the front lines of Yemen's long-running war. Ansar Allah now has a position from which it can exert substantial leverage over one of the world's major maritime chokepoints, at the same time that the Strait of Hormuz is severely disrupted.Ansar Allah captured Sana'a in 2014 after years of political instability following the Arab Spring. Saudi Arabia and its allies intervened militarily in 2015 to support the internationally recognised Yemeni government, while Iran provided increasing political and military support to Ansar Allah. Despite years of Saudi air strikes and extensive Western military assistance to its opponents, Ansar Allah was not defeated.A UN-brokered truce in 2022 substantially reduced the fighting but did not resolve the underlying conflict. The ceasefire eventually broke down, and the conflict escalated again after Saudi Arabia bombed Sana'a airport on 13 July, reportedly striking while a Mahan Air-operated civilian aircraft carrying the Yemeni delegation who had attended Ayatollah Ali Khamenei's funeral ceremonies and 200 regular passengers was approaching the airport. The aircraft had to divert to a smaller airfield. The incident marked another sharp deterioration in relations and was followed by renewed fighting.The latest offensive therefore represents a remarkable reversal. Saudi Arabia has spent years trying to prevent Ansar Allah from consolidating control over Yemen, yet Saudi-backed forces have now lost much of the western coastline.Mayyun Island makes the development particularly significant. Its location in Bab al-Mandeb gives whoever controls it an advantageous position overlooking the shipping channels. Ansar Allah does not necessarily need to close the strait physically. If shipowners and insurers consider the route too dangerous, commercial traffic can simply be diverted, as happened during the earlier Red Sea crisis when vessels were rerouted around the Cape of Good Hope.This is also a problem for Saudi Arabia and the United States because neither can simply impose a military solution. Saudi Arabia's intervention has failed to eliminate Ansar Allah, while the United States is already heavily committed in the wider conflict with Iran. Washington has reportedly resisted Saudi requests for direct strikes against Ansar Allah, instead offering intelligence and other assistance.The American problem is not simply whether it possesses sufficient firepower. Sustaining military power overseas depends on an extensive logistics network, and US facilities in the Gulf have themselves suffered damage during the conflict. At a time when Washington is already using naval, air and missile-defence resources across the region, the ability to sustain another prolonged campaign cannot be assumed.The same applies to regional partners. Pakistan has close defence ties with Saudi Arabia but also has strong reasons to avoid being drawn directly into another war. The UAE and Saudi Arabia have never had identical objectives in Yemen either. Regional states have their own interests and cannot simply be assumed to act as extensions of American strategy.What happens in Yemen therefore matters because it is occurring at the intersection of military and economic vulnerabilities.Bab al-Mandeb connects the Indian Ocean with the Red Sea and the Suez Canal. Hormuz is the principal maritime outlet for Gulf oil, carrying roughly 20 million barrels a day before the present disruption. If both routes remain unreliable, the consequences extend well beyond the countries immediately involved.The global economy has so far absorbed much of the shock. China, the world's largest crude-oil importer, has reduced its crude imports since the war began, while drawing on inventories and adjusting its sources of supply. That has helped prevent the disruption from translating immediately into an even larger global supply deficit.But lower Chinese imports do not make the underlying problem disappear. They postpone part of the pressure by reducing demand while inventories and alternative supplies absorb the difference. As China's refineries return to normal purchasing requirements, the physical availability and price of crude will again become more important.The longer the disruption persists, the more expensive that adjustment becomes. Longer shipping routes, higher insurance and freight costs, reduced supply flexibility and higher crude and refined-product prices ultimately feed into the cost of producing and transporting goods, putting pressure on both inflation and economic growth.This is where the geopolitical crisis intersects with the increasingly contested international financial system. The dollar-centred architecture that emerged from Bretton Woods has proved extraordinarily durable, evolving after the end of dollar convertibility into gold in 1971 and reinforced by the dollar's dominant position in global energy and finance.There is no reason to predict its sudden collapse. But the pressures are becoming harder to ignore. US gross national debt has now exceeded $40 trillion, while the 10-year Treasury yield has approached the psychologically important 5% level. Higher borrowing costs become increasingly consequential when the underlying debt is expanding so rapidly.Economists such as Radhika Desai argue that these developments form part of a broader transition away from the financial architecture associated with American dominance. Whether or not one accepts the more dramatic versions of the de-dollarisation argument, enormous US debt, elevated Treasury yields, changing foreign reserve strategies and the growing use of alternative financial arrangements all point to a system under increasing pressure.The connection between energy and finance is important. A prolonged oil shock can increase inflation; persistent inflation can keep interest rates higher; higher rates increase the cost of servicing government debt; and rising fiscal costs can place further pressure on bond markets. These are not mechanical relationships, but together they can reinforce one another.South Africa is exposed to this chain even though it has no influence over the events producing it.The country is exposed to international crude and refined-product prices, as well as the rand-dollar exchange rate. National Treasury has already had to introduce extraordinary temporary measures to cushion consumers and businesses from the earlier fuel-price shock, but the government cannot indefinitely absorb increases in the international cost of energy.Diesel is particularly important because it is an input into almost every productive sector: road freight, agriculture, mining, construction, fishing, logistics and backup electricity generation. A sustained increase in diesel prices therefore becomes an economy-wide cost shock, affecting businesses and consumers far beyond the petrol station.This is ultimately why Yemen matters to South Africa. The conflict demonstrates how quickly events in a relatively poor and distant country can interact with global energy markets, maritime security and the financial system on which international trade depends. It also reminds us that even the world's most powerful states have finite military and economic capacity..Read more:.Israel vows fierce retaliation after Houthi missile strikes near the main airport.South Africa cannot control the price of oil, the security of Bab al-Mandeb or the yield on US Treasuries. What it can control is the resilience of its own economy.That means economic growth is not merely a desirable policy objective in difficult times. It is a strategic necessity. A growing economy that encourages broad participation, expands the tax base, attracts investment and increases productive capacity gives households, businesses and government a larger buffer when external shocks arrive.In an increasingly uncertain world, resilience will matter as much as protection. The best protection South Africa can build is an economy strong enough to absorb the shocks it cannot prevent..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

A rebel group just grabbed a global chokepoint — your diesel bill should worry

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