The Toll Booth and The Trigger

PART I — THE WEEK IN BRIEF

This week’s brief covers the period March 22–30, 2026, the fifth week of the US-Israel war on Iran. Key developments include Iran’s enactment of an ad hoc Hormuz toll regime, the Houthi entry into the conflict with missile strikes on Israel, and the continued surge of Saudi oil exports through the Red Sea port of Yanbu, as the East-West Gulf bypass pipeline “Petroline” hits full capacity. A multilateral diplomatic track was convened in Islamabad over the weekend, without Iran or the US present. The two-straits scenario, a simultaneous closure of Hormuz and Bab al-Mandeb, has not occurred. In this brief we interrogate why that is, but the stakes have ratcheted up.

Hormuz: From Closure, to Toll Booth

Iran’s Islamic Revolutionary Guard Corps (IRGC) this week activated an informal toll regime charging ‘permitted’ flags $2 million per voyage, payable in yuan. Foreign Minister Abbas Araghchi announced selective safe passage for vessels belonging to China, Russia, India, Iraq, and Pakistan, only, but not without glitches. On March 27, IRGC forces turned back two China-flagged COSCO vessels, the CSCL Indian Ocean and the CSCL Arctic Ocean, near Larak Island, despite Beijing’s supposed inclusion on the approved list. The incident exposed a fracture between Iran’s Foreign Ministry and the IRGC under Mojtaba Khamenei’s still-consolidating authority.

Iran separately rejected the US 15-point ceasefire proposal on March 25, counter-demanding sovereignty recognition over Hormuz, war reparations, and closure of all US Gulf bases. On March 26, President Trump extended his ultimatum a second time, pushing threatened strikes on Iranian power plants to April 6. Brent crude settled near $112.57 on March 28.

India launched Operation Urja Suraksha, deploying five frontline warships to escort Indian-flagged energy tankers through Hormuz under Iran’s “friendly-nation” framework. The first confirmed transits by LPG carriers Pine Gas and Jag Vasant reached Indian ports March 26–28. In its largest drawdown of strategic reserves since 1973, Japan released 80 million barrels from strategic reserves, and METI announced emergency measures to raise coal-fired power plant utilization.

Japan’s Prime Minister Takaichi declined combat escort duties at her March 19 Trump summit but signaled conditional willingness to deploy JMSDF minesweepers after any ceasefire. On March 28, NHK reported the first Saudi crude shipment to bypass Hormuz and reach Japan, arriving off Ehime.

The European Union failed on March 16 to agree on expanding Eunavfor Aspides to cover the strait. In an underreported development, the USS Gerald R. Ford aircraft carrier exited the Red Sea for Crete for repairs after a significant shipboard fire, leaving the carrier USS Abraham Lincoln repositioned more than 1,100 kilometers from Iran. The carrier George H.W. Bush is likely close to the theater.

Yemen’s Houthis Enter the War Against Israel, Not the Straits (Yet)

On March 28, Houthi military spokesman Yahya Saree claimed responsibility for two separate Houthi ballistic missile attacks allegedly aimed Israeli military sites in Southern Israel, and a drone attack aimed at the port of Eilat. This was the Houthis’ first offensive action since the war began. Israeli air defense intercepted all attacks. Saree vowed that military operations would continue, and threatened US shipping in the Red Sea, though no offensive maritime action followed during the coverage period.

The March 28 launch followed a previous statement March 27, in which Saree outlined three explicit trigger conditions for direct Bab al-Mandeb intervention: use of the Red Sea for US or Israeli military operations against Iran; expansion of the coalition to include additional state partners; and continued escalation of strikes on Iranian territory. The Houthis have held their maritime ceasefire with the US (brokered by Oman in May 2025), and have not targeted a single American vessel. Saudi tankers are still loading at Yanbu.

A vessel carrying copper wire and medicine departed Bandar Abbas on March 12 and was intercepted near Bab al-Mandeb on March 27 by forces of Yemen’s internationally recognized government, the third such interdiction in less than 20 days. Separately, Yemen’s internationally recognized government reported that Iranian personnel entered Hodeidah by dhow from the Horn of Africa in the days before the March 28 launch.

Yanbu: The Bypass at Full Stretch

Saudi Arabia’s East-West Petroline reached full capacity of 7 million barrels per day as of March 28. Crude exports from Yanbu have hit 5 million barrels per day, with an additional 700,000 to 900,000 barrels per day of oil products. The pipeline is operating at the absolute ceiling of its design parameters, carrying a load it was never built to sustain as a primary export corridor.

Iran struck the SAMREF refinery, a joint Aramco-ExxonMobil facility, at Saudi’s Red Sea port of Yanbu with a drone on March 19, while simultaneously launching a ballistic missile at the port, intercepted by Saudi air defenses. Saudi Arabia responded by expelling Iran’s military attaché and four embassy staff within 24 hours. Iran also struck Prince Sultan Air Base, a Saudi facility and regional US military hub, multiple times in the week of March 22–28, firing at least six ballistic missiles and more than two dozen drones in the March 28 attack alone, wounding more than two dozen US service members and damaging aerial refueling aircraft.

The Arab Gulf’s combined pipeline bypass capacity through Petroline and the UAE’s ADCOP to Fujairah amounts to roughly 8.5 to 8.8 million barrels per day against the 20.9 million that flowed through Hormuz before the war. War-risk insurance premiums for vessels transiting toward Yanbu have surged over 300 percent.

Egypt: Fiscal Pressure Builds

The Economist ranks Egypt fourth among emerging markets most exposed to the war’s oil shock, based on net energy import position, Gulf remittance dependency, foreign currency reserves, and external debt. President Sisi has confirmed a cumulative $10 billion loss in Suez Canal revenues. The pre-war projection of an $8 billion recovery for fiscal year 2026/27 is no longer achievable.

Egypt raised domestic fuel prices by up to 30 percent on March 10 — a reversal of late-2025 assurances against further hikes. Internal and external debt servicing consumed over 83 percent of total government revenues in the six months prior to the war. Approximately $4 billion in hot money exited Egypt within three weeks of the war’s outbreak; roughly $6 billion has left since February 28. Egypt is issuing Treasury Bills at 23 percent interest and citizen bonds at 17 percent. The IMF’s fifth and sixth EFF reviews were completed in late February, unlocking approximately $2.3 billion, but the program’s assumptions have been overtaken by events. Egypt’s foreign minister Badr Abd al-Atti traveled to Islamabad for the weekend multilateral talks alongside his Saudi and Turkish counterparts.

The Humanitarian Clock

Urea prices jumped 32 percent in the week following the February 28 strikes. DAP prices are running at approximately $655 per metric tonne — above the threshold at which East African smallholder fertilizer application rates historically decline. The WFP’s Sudan supply chain has been rerouted, adding 9,000 kilometers and 25 additional days per delivery cycle; the Salalah waypoint no longer functions. WFP requires $700 million through June 2026 to maintain operations. The WFP has terminated all 365 staff contracts in Houthi-controlled northern Yemen, effective March 31, affecting approximately 18 million people. The June planting season in Sudan, Somalia, and Ethiopia is a fixed deadline. If fertilizer is not in place by approximately May, a 2026 harvest shortfall in those countries is locked in regardless of subsequent diplomatic developments.

PART II — ROUNDTABLE DISCUSSION

The following reflects the views of Red Sea Futures Sr. Analysts. We synthesize reporting from a network of 230+ regional experts; not all inputs are named or directly cited. All contributors speak in their own capacity.

On the Houthis’ Do Or Don’t

Abo Alasrar: Given the timing and the month-long delay, the launch reads less as an operational decision than as a political one. The cost of continued silence was higher than the cost of a launch. A movement that told its fighters this was a divine cause could not sit through a second month without acting and retain any credibility.

She draws a sharp distinction between the missile launch, a political signal, and the Houthis’ primary strategic asset, which remains their ground force and territorial expansion inside Yemen, not their maritime or missile capability. The ‘Red Death’ mobilization she documented in earlier work is about manpower, not missiles. Missiles require imports; manpower does not.

On sustainability, she notes that between September 2024 and July 2025, more than a third of the 101 Houthi ballistic missiles fired toward Israel failed outright. The supply pipeline, already squeezed by interdiction, faces compounding pressure from sustained bombardment of Bandar Abbas, the IRGC’s primary transfer point. When a movement cannot reliably get copper wire into the country, it cannot sustain a missile campaign. But she cautions that the interdiction campaign is squeezing rather than sealing the pipeline, and that the Houthis do not need to win the interdiction battle — only to outlast it.

Abo Alasrar: “While the missile was generating headlines, the Houthis were still killing people in Yemen. Four soldiers from the Southern Forces died in separate attacks on the Dhalea and Harib fronts. This received no international coverage. On the same day, Houthi state media ran stories about launching summer indoctrination courses across Hodeidah, Hajjah, and Ibb under the slogan ‘Knowledge and Jihad.’ The ground force is the Houthis’ main asset. The missiles are the sideshow.”

On the Saudi dimension, Abo Alasrar notes that Saudi tankers are still loading at Yanbu — suggesting the Houthis’ hands may be tied by arrangements not yet publicly known. But she identifies this as a potential trap: breaking the US ceasefire risks drawing Washington back into a direct campaign and losing Oman as mediator. Naming a card — the Bab al-Mandeb option — is not the same as playing it.

On Deadlines and Offramps

Ethan Chorin: “We’ve seen some nuanced signals in the statements of senior Gulf diplomats. UAE Ambassador to the US Yusuf Al-Otaiba condemns Iranian Gulf strikes in a March 28 WSJ Op-Ed, but says ‘We want Iran as a normal neighbor.’ Former Qatari PM Hamad bin Jassim Al Thani on March 12 highlighted the need to draw broader lessons from the Iran war, while emphasizing the need to build regional solidarity and alliances — without excluding Iran. These remarks highlight the potential role played by Arab Gulf states in generating an off-ramp to this war, as the principal antagonists articulate incompatible positions.”

Michael Brill assesses that the diplomatic track is unlikely to produce a deal before April 6. The combatants were not present at the Pakistan mediation meetings, and the gap between US and Iranian positions — Iran demands sovereignty recognition over Hormuz, war reparations, and closure of US Gulf bases — is structural, not bridgeable in ten days.

Brill: “There’s a better chance of Trump extending his deadline again than a deal being reached by April 6. Based on available reporting, it seems unlikely that the Omanis or Pakistanis will be able to broker a deal, especially since the combatants weren’t even present for the meetings in Pakistan.

On the oil price dynamics, Brill raises the question of whether the market is already partially pricing a post-April 6 scenario — noting that reduced Red Sea traffic is already visible in freight data. He also identifies Israeli strikes on Iranian energy infrastructure as the scenario with the greatest potential to affect the regime’s sustainability, at the cost of dramatically worsening the global energy crisis.

Brill: “Even the threat of cheap naval mines at Bab al-Mandeb could have the desired effect, without requiring a full maritime campaign. The Houthis don’t need to fire to disrupt — they need only to be believed.”

On the Yanbu kinetic risk, Brill notes that the diplomatic expulsion of Iran’s military attaché is likely a lower-order factor in Houthi decision-making than the broader strategic calculus — Saudi Arabia’s need to keep the Red Sea corridor open is itself a form of leverage the Houthis understand.

On Shipping and Insurance

Captain Roy Facey addresses the commercial shipping implications of Houthi re-entry. His assessment is direct: operators who had been monitoring a possible Suez resumption will now defer that question indefinitely.

Facey: “The re-entry of the Houthis into the conflict will incentivise container mainline operators to continue using the Cape route rather than the Canal, with higher Red Sea war-risk cover costs balancing — to some extent — the higher fuel and operating costs via the Cape.”

On the insurance precedent, he draws on the Iran-Iraq Tanker War: rates moved through the roof but coverage was never fully suspended, even as ship losses mounted. The current situation is structurally more acute — neither strait was simultaneously threatened in the Tanker War era, and Hormuz itself was never effectively closed. He notes one important data point on Yemen food flows: Salif food imports are running at 137 percent of the 2025 average, and Hodeidah at 94 percent, with bulk wheat at 105 percent — suggesting commercial food shipping into Houthi-controlled ports has not yet been disrupted. But he flags that the two operational berths at Salif and Hodeidah are highly susceptible to air attack if Israel decides to respond to the Houthi missile launches.

On Japan, and Trump’s Request

Romaric Jannel reports that Japanese domestic discourse has shifted markedly in the past week, with business-oriented media increasingly framing the crisis in terms of adaptation to oil scarcity rather than near-term resolution.

Jannel: “Japanese news outlets have increasingly emphasized the need to adapt to oil scarcity and high prices, which affect daily life and industrial activity. This shift in discourse seems also intended to prepare the public for a prolonged period of disruption — maybe for more.”

On the legal question of JMSDF expansion, he is clear: under current legislation, immediate escort operations in an active combat environment appear legally unavailable. The more politically viable options are information gathering, limited protection for Japanese shipping, and minesweeping after a ceasefire. Any broader operational role would require new legislation. He notes that Prime Minister Takaichi, having just won an election with strong public support, is managing a careful balance — resisting Trump on the most exposed asks while protecting the Japan-US relationship.

Jannel: “Without a legal change in Japan, the most likely outcome is limited or largely cosmetic policy adjustments. This might change if the conflict begins to affect the Japanese public much more directly and materially.”

Jannel also notes Australia as a useful point of comparison: similarly declining to send naval vessels, similarly exploring alternative forms of contribution, and similarly caught between alliance obligations and domestic political constraints.

On Egypt’s Squeeze

Robert Springborg grounds an assessment of Egypt’s fiscal position it in data that the standard canal-remittance framework understates. His core argument is that Egypt’s vulnerability pre-dated the war, and the conflict has removed whatever margin remained.

Springborg: “Internal and external debt servicing, which rose by 41% in 2025, consumed over 83% of total government revenues in the six months prior to the outbreak of war. About half of Egypt’s foreign currency reserves will in the coming year be drained into servicing its foreign debt. The fiscal balance is unsustainable.”

Springborg identifies the political economy trap precisely: the Sisi regime cannot leverage whatever diplomatic payoffs it receives into an effective growth strategy, because the structural conditions (military dominance of the economy, repression, mismanagement) preclude it. Egypt is positioning itself as a bridge and hoping to be paid for the role. It is a strategy for survival, not recovery.

Springborg: “Egypt, once the dominant actor on the Arab stage, is now a bit player, hoping to receive some tips for the marginal role it hopes to play in ending the war.”

CONTRIBUTORS · ISSUE 02

Red Sea Futures synthesizes reporting from a network of 230+ regional experts. Contributing analysts speak in their own capacity. Not all inputs are named or directly cited; some sources are held in confidence.

Fatima Abo Alasrar: Founder of The Ideology Machine, a publication on authoritarian information systems. Her work examines the intersection of ideology, conflict, and great-power competition, with particular attention to how Iranian-aligned movements interact with broader geopolitical currents across the Middle East. Previously, Alasrar was a senior analyst at the Arabia Foundation in Washington, DC, MENA Director at Cure Violence, and a research associate at the Arab Gulf States Institute in Washington. Speaks Arabic and French.

Michael Brill is a PhD candidate in Near Eastern Studies, Princeton University; MA in Arab Studies, Georgetown University. Global Fellow, Woodrow Wilson International Center for Scholars’ History and Public Policy Program (2024–2025); Non-Resident Fellow, US Air Force Academy’s Institute for Future Conflict. Visiting Scholar in Middle East Studies at Smith College and Visiting Lecturer in Political Science at Westfield State University. Research focuses on Iraq under Ba’th Party rule. Published in the International Journal of Middle East Studies, Middle East Journal, Foreign Affairs, and War on the Rocks.

Dr. Ethan Chorin is Founder and CEO of Red Sea Futures. A former US diplomat posted to Tripoli and Abu Dhabi, he has spent more than 20 years in senior corporate and government positions touching the Red Sea and Indian Ocean for Shell Oil, DP World, and BRG. Author of five books including Benghazi: A New History (Hachette, 2022) and the forthcoming Red Sea Rising (Harvard University Press). A two-time Fulbright Fellow, Chorin wrote his PhD dissertation at UC Berkeley on port competition in the Red Sea.

Captain Roy Facey has over 40 years as lead advisor on port master plans, feasibility studies, concession tender documents, accident investigations, and dredging assessments throughout the Red Sea and Gulf region. A master mariner Facey’s expertise covers commercial port operations, shipping route planning, supply chain risk, and tariff optimization. MSc in Offshore Technology and Marine Structures; BS in Engineering Maritime Studies.

Dr. Romaric Jannel specializes in ethics, AI, and comparative philosophy, with research interests spanning trust, responsibility, agency, and the conceptual frameworks shaping social and technological systems. Program Director at the Collège International de Philosophie in Paris and Visiting Researcher at the Research Center for Intercultural Phenomenology at Ritsumeikan University in Japan, Jannel holds a PhD from the École Pratique des Hautes Études–PSL University .

Prof. Robert Springborg is Research Fellow at the Italian Institute of International Affairs and Adjunct Professor at Simon Fraser University. Has held senior academic positions including the MBI Al Jaber Chair in Middle East Studies at SOAS, Director of the American Research Center in Egypt, and professorships at the Naval Postgraduate School and Macquarie University. Has consulted on Middle East governance for USAID, the US State Department, UNDP, and various UK government departments. Author of Egypt (2018) and Political Economies of the Middle East and North Africa (2020).

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