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

Dr. Anas Alhajji argues that the United States, not Iran, effectively closed the Strait of Hormuz, a view he says he published more than a year before the conflict began. The mechanism was insurance rather than military action: a US Navy strike near Silila killed roughly 85 Iranian soldiers, triggering EU solvency laws that forced British and European insurers to extend war-risk coverage across the entire Indian Ocean. Unable to absorb that exposure, insurers invoked a seven-day cancellation clause and pulled all policies, locking tankers in the Persian Gulf without a single direct military blockade. Iran claimed credit for the closure only after insurance companies had already shut the waterway. Alhajji contends the strategic logic was to demonstrate US energy and AI dominance to China, that this framework originates from the deep state, and that it would have been pursued under any administration.

The MOU collapsed not because of Iranian government opposition but because IRGC hardliners, who control large portions of the Iranian economy outside formal government structures, continued attacking ships to derail negotiations. Alhajji compares their behavior to a drug cartel: normalization would cost them control, money, and prestige, so they have every incentive to prolong the conflict. Trump reinstated the blockade in response, pushing oil prices up roughly 12 to 15 dollars, though prices did not reach 100 to 120 dollars because markets had long assumed the conflict would drag on. Iran's oil production in 2025 reached its highest level in more than 20 years, and February exports were the highest since 2017, making the IRGC's sabotage of negotiations particularly costly to Iran's own economy.

Bab el-Mandeb carries approximately six million barrels per day, mostly Russian and Saudi crude, and Alhajji identifies it as the next major chokepoint risk. Both Houthi and IRGC leaders have threatened closure. The specific danger is that attacks on even a small number of tankers would prompt European insurers to cancel war-risk coverage for the waterway, exactly as happened with Hormuz. If Western insurance is canceled, Saudi Arabia cannot route oil through Bab el-Mandeb. Putin would be a direct beneficiary because Russian oil moves on sanctioned tankers insured by Russia, China, and India rather than Western carriers. Alhajji estimates that more than four million barrels per day of Saudi crude diverted through East-West pipelines could be lost, forcing prices well above 100 dollars. He considers the probability of Saudi Arabia and the Houthis returning to their prior agreement high, since Houthi attacks on civilian sites including airports are something Saudi Arabia will not tolerate indefinitely.

Medium-sour Oman crude exceeded 170 dollars per barrel during the Hormuz closure while Brent traded around 105 dollars and WTI around 98 dollars. Chinese refiners refused to import oil above 170 dollars and cut imports by approximately six million barrels per day, which pushed prices from the 90s down to the 70s. China had pre-built inventories anticipating a Hormuz closure and used an estimated 1.5 million barrels per day of floating storage not captured in onshore satellite data, causing analysts relying on widely circulated inventory charts to misread the situation. China's official economic growth figure for Q2 2026 is the lowest since the 1990s, and Alhajji cautions China cannot sustain its current policies indefinitely if the Hormuz closure continues into next year.

The SPR release rate reached a record high of 1.9 million barrels per day on some days, while the maximum refill injection rate is approximately 400,000 barrels per day. Roughly 99 million barrels have been released with about 73 million barrels still available above the 250 million barrel congressional floor. SPR releases were structured as loans requiring return of oil plus interest in kind, meaning companies that borrowed at 120 dollars per barrel will return oil when prices are 60 to 80 dollars, generating hundreds of millions in profit at taxpayer expense. Because repayments are in kind rather than market purchases, Alhajji says companies will not refill at higher prices, undermining the permabull case for price increases driven by SPR refilling.

The real inventory shortage is in petroleum products rather than crude. Some US refineries are running above 100 percent of capacity with the sector averaging 96 to 97 percent utilization, meaning even massive product demand cannot drive additional crude demand or crude prices higher. Three major Gulf refineries in Kuwait, Saudi Arabia, and the UAE had diesel and jet fuel exports shut down during the Hormuz crisis, and most of the crude lost was medium sour, limiting Asian refiners' ability to produce diesel even with spare capacity. Without SPR releases of medium sour crude, Alhajji says US diesel prices would likely have reached around 12 dollars per gallon.

Alhajji's forward-looking assessment is that full-scale war resumption is very unlikely. The most probable path is continued US targeting of extreme IRGC elements through strikes until they are weakened enough for Iranian negotiators to act on their commitments. He also warns that the ghost of Hormuz will persist indefinitely regardless of how the Iran crisis resolves, because any militia or disgruntled faction now knows that threatening the strait guarantees global attention and that fabricated attack reports can move oil prices by approximately three dollars before being retracted, creating a permanent market vulnerability.