Conflict in the Middle East and drought in Panama and Europe are squeezing the world's most vital shipping lanes at the same time. Iran's closure of the Strait of Hormuz and a Houthi campaign against Saudi shipping have cut two Middle Eastern routes, while low water is slowing the Panama Canal and stranding barges on the Rhine.
Iran closed the Strait of Hormuz in March after the United States and Israel attacked the country, and the waterway remains closed to most ships. The strait normally carries 20% of the world's oil. It also carries large shares of fertilizer and industrial inputs, including 23% of ammonia, 34% of urea and 20% of phosphate. The strait additionally carries roughly 30% of helium and 24% of sulfur.
Houthis squeeze the second Red Sea route
On the other side of the Arabian Peninsula, the Houthi group Ansar Allah has escalated its conflict with Saudi Arabia and closed the Bab el-Mandeb Strait to Saudi vessels. Saudi tankers are now sailing around Africa to reach Asia instead. Traffic through the strait has not recovered since the Houthis first curtailed it in November 2023, even after a May 2025 cease-fire with the United States, and has now dropped again as the fight with Saudi Arabia resumes.
Iran, meanwhile, has rejected talks with Washington and is reportedly waiting for oil prices to climb further before returning to negotiations, so this geopolitical risk to shipping shows no sign of easing soon.
Drought adds a second front in Panama and Europe
Unlike the strait closures, the Panama Canal and the Rhine River face a natural constraint: not enough rain. Vessels must now wait 10 days to transit the Panama Canal unless they pay a premium to skip the queue in a special auction.
In Europe, the Rhine is at its lowest levels since records began in 1880, forcing ships to carry less cargo so they don't scrape the riverbed. Some freight has shifted onto trucks and rail instead, and the river is now effectively split between an upper and lower section because barges cannot pass through Kaub, southeast of Cologne.
Two different problems, one shared vulnerability
The Hormuz and Bab el-Mandeb disruptions stem from conflict and could in theory ease through negotiation, though Iran has so far rejected talks. The Panama and Rhine problems stem from weather and have no one to negotiate with. Together, the four chokepoints show how global crude oil and freight flows depend on a small number of narrow passages that can each be disrupted by entirely different causes at the same time.
Source: Oilprice.com
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