Houthis seize Perim Island, tightening grip on Bab el‑Mandeb Strait
Yemen’s Houthi forces captured the strategic island of Perim and the coastal town of Dhubab, heightening the risk of disruption to the Bab el‑Mandeb shipping lane and potentially pushing global oil prices higher.
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Sector Effect
Negative · Do not buy
Oil & Gas and Power sectors face higher import costs and price volatility, so avoid buying related stocks.
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Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- PowerNegatively affected
- EconomyNegatively affected
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Sectors: Oil & Gas, Power, Economy, Markets — Negative · Do not buy. PSX tickers: OGDC, PPL, MARI, PSO, SNGP, ATRL. Oil & Gas and Power sectors face higher import costs and price volatility, so avoid buying related stocks.
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Open on Business Recorder## Houthi advance to Perim Island
Yemen’s Houthi militia announced on Friday that they had taken control of Perim Island, located at the mouth of the Bab el‑Mandeb Strait, a key chokepoint for global oil shipments. The move follows reports that the group also seized the Red Sea coastal town of Dhubab, which faces the island.
## Strategic implications for oil flows
The Bab el‑Mandeb Strait is the second most important oil transit corridor after the Strait of Hormuz. If the Houthis consolidate control, Iran’s regional influence could increase, potentially restricting oil supplies that pass through the strait. Saudi Arabia, the world’s largest oil exporter, has already relied on the Red Sea route since the Hormuz corridor was effectively closed by Iranian actions earlier this year.
## Possible impact on Saudi oil infrastructure
Satellite images released on Thursday showed smoke near Saudi Arabia’s East‑West crude pipeline, a critical artery that diverts Saudi crude from the Gulf to the Red Sea. While Saudi authorities and Aramco have not confirmed any incident, the visual cue adds to market concerns about supply disruptions.
## Oil price reaction
Global crude prices were on track to finish the week above $100 per barrel, the first time since mid‑May, driven by fears of a new bottleneck in the Bab el‑Mandeb. However, prices slipped slightly on Friday after reports that Middle‑East foreign ministers were negotiating a temporary arrangement to keep shipping flowing through the Strait of Hormuz.
## Regional diplomatic moves
Gulf foreign ministers are slated to meet Iranian counterparts in Oman’s Salalah on Monday, seeking a short‑term deal to manage traffic through Hormuz. Meanwhile, the United States has declined Saudi requests for direct strikes against the Houthis, opting for limited support to Riyadh while avoiding deeper military involvement.
## Outlook for Pakistan
Any prolonged disruption in the Bab el‑Mandeb could raise global oil prices, increase import bills for Pakistan and pressure the Pakistani rupee. The oil‑dependent sectors on the Pakistan Stock Exchange, particularly Oil & Gas and Power, may face margin compression and earnings volatility.