MacroVoices #541 Dr. Anas Alhajji: Bab el-Mandeb: The Next Oil Chokepoint Nobody's Watching

Dr. Anas Alhajji argues that the Hormuz Strait was effectively closed not by Iran but by the United States, which triggered war risk insurance cancellations that locked up most tankers in the Gulf without any direct military engagement. Insurance companies later restored coverage at very high rates, but ships still did not move, and nine Indian tankers remained stranded even after a memorandum of understanding was signed. Alhajji says the strait has been poisoned in the sense that elevated insurance costs will persist well after it formally reopens. He claims he published a prediction more than a year before the conflict that the closure would come from the United States rather than Iran, and that China assembled large multilingual teams reading his Arabic-language publications and began building oil, gas, and coal inventories in anticipation.

The Iranian regime is not a unified actor. IRGC hardliners operate separately from government negotiators and benefit financially and politically from sanctions, meaning normalization would cost them control, money, and prestige. These hardliners continued attacking ships to derail negotiations and appear to have succeeded, prompting Trump to cancel the MOU and reinstate the blockade. Oil prices rose approximately 12 to 15 dollars following that cancellation but did not reach 100 to 120 dollars because markets had long assumed the conflict would drag on. Alhajji says the US intentionally closed Hormuz expecting to reopen it on a controlled timeline, but execution went wrong because extreme IRGC elements were not part of any plan. His most likely scenario is that the US continues targeting those extreme factions until they are weakened enough that Iranian negotiators can fulfill their commitments, and he puts the probability of returning to full-scale war as very small.

Bab el-Mandeb is the episode's forward-looking risk. Approximately six million barrels per day pass through it, mostly Russian and Saudi crude. Alhajji had told listeners in March not to worry about it because a Saudi-Houthi agreement was holding, but he has revised that assessment following a Houthi attack on Saudi Arabia's Abha airport that killed a civilian and broke the agreement. The specific risk is not a full closure but an insurance cancellation cascade. A small number of tanker attacks would be sufficient to cause European insurance companies to cancel war risk coverage, replicating the Hormuz mechanism and effectively removing more than four million barrels per day of Saudi crude from markets. Russian oil moving to India and China travels on sanctioned tankers insured by Russia, China, and India and would be entirely unaffected, making Putin a significant beneficiary of any disruption. Alhajji puts the probability of Saudi Arabia and the Houthis returning to their prior agreement as very high given Saudi interest in preventing attacks on civilian sites.

When insurance companies effectively closed Hormuz trade, DME Oman medium-sour crude exceeded 170 dollars per barrel in March while Brent was quoted around 105 and WTI around 98, meaning benchmark prices did not reflect the actual physical market. Alhajji calls the widespread analyst unawareness of prices reaching that level a significant analytical failure. China reduced imports by approximately six million barrels per day through a combination of halting inventory buildup, absorbing supply into floating storage, banning petroleum product exports, and increasing domestic production. Saudi Arabia and the UAE diverting oil through pipelines, global SPR releases, and demand destruction together produced a roughly balanced market corresponding to a temporary Brent range of approximately 75 to 85 dollars per barrel. Alhajji argues the US goal of demonstrating dominance over China through the Hormuz closure did not succeed because China effectively rebalanced the market and covered its own energy needs.

Most of the widely cited decline in global oil inventories was in strategic petroleum reserves rather than commercial stocks, and Alhajji says analysts conflated the two categories. SPR releases push prices down because they are deliberate emergency responses, while commercial inventory declines push prices up, making the distinction analytically critical. US SPR loans were structured so that borrowers who took oil at around 120 dollars per barrel will return it when prices are 60 to 80 dollars, generating hundreds of millions in profit at taxpayer expense, and because replenishment is a loan return rather than a market purchase it will not provide the bullish price support many analysts expect.

Alhajji's most consequential structural proposal is for OPEC Plus producers and consuming countries to jointly finance massive strategic petroleum reserves located near consuming markets, physically bypassing every major chokepoint. He suggests OPEC Plus could place 200 to 300 million barrels or more inside India, which lacks the capital to build them itself, effectively turning India into an oil exporter during any chokepoint closure and drawing it functionally into the OPEC Plus orbit. He also describes what he calls the ghost of Hormuz as a permanent market feature, warning that any militia, terrorist group, or even an oil trader with a large social media following can now trigger a meaningful price reaction by fabricating or amplifying an incident report, and predicts this dynamic will persist for years or decades after any formal resolution.

Alhajji identifies natural gas and LNG as the primary winners from the convergence of the Hormuz crisis, rising AI demand, and data center buildout, with coal as a secondary winner.