Shipping constraints are converging across several major trade routes. Conflict has reduced traffic through the Strait of Hormuz and Bab el-Mandeb, while drought is limiting capacity on the Panama Canal and Rhine River. For energy and freight markets, the combined pressure looks more persistent than a short-lived disruption: each route faces a different constraint, and there’s no quick fix for all four.
Two strategic straits face renewed pressure
Since early March, Iran has closed the Strait of Hormuz in response to attacks by the United States and Israel. The waterway between Iran and Oman carries about 20% of global oil shipments, along with sizable shares of other commodities: ammonia (23%), urea (34%), phosphate (20%), helium (30%) and sulfur (24%). Most of these materials are produced from, or alongside, oil and natural gas.
Farther west, fighting between Saudi Arabia and Ansar Allah, the group also known as the Houthis, has intensified. The Houthis have again closed Bab el-Mandeb to Saudi vessels. The strait links the Red Sea to routes toward Asia, including traffic traveling through the Suez Canal.
The Houthis say other commercial vessels can still pass, but attacks on Saudi ships have led many operators to avoid the area. Saudi oil tankers are taking the longer route around Africa, adding time and expense. The Houthis have also demonstrated the ability to strike Saudi Red Sea ports, leaving the possibility of further disruption to that alternative route.
Traffic through Bab el-Mandeb has struggled to recover since the Houthis first curtailed passage in November 2023. A cease-fire with the United States in May 2025 did not restore normal volumes. The latest escalation has pushed tanker traffic lower again, according to shipping reports.
Drought is cutting capacity in Panama and Europe
The Panama Canal faces a different constraint: water. Its locks draw on artificial lakes replenished by rainfall, and drought has reduced the number of ships the canal can handle each day. Vessels now face waits of about 10 days unless they pay a premium through a special auction to move ahead in the queue. The canal’s water needs also compete with local supply, as discussed in earlier reporting on the canal’s water use.
In Europe, low water has sharply restricted the Rhine, a central freight route. Following repeated heatwaves, the river has reached its lowest levels since records began in 1880. Barges must carry lighter loads to avoid grounding, and some freight has shifted to trucks and trains. At Kaub, southeast of Cologne, low water has made the river effectively impassable to barges, splitting traffic between the upper and lower Rhine.
Disruptions may outlast the immediate shocks
It’s tempting to treat the strait closures as temporary. But the record since late 2023 shows that Bab el-Mandeb traffic did not rebound after the 2025 cease-fire, and Iran has rejected negotiations with the United States for now. The source article says Iran is believed to be waiting for higher oil prices before returning to talks. That leaves little basis for expecting a rapid rise in traffic through either strait.
Panama and the Rhine pose a different challenge. Their constraints depend on rainfall and river levels, not negotiations. Canal queues and reduced barge loads can redirect cargo, but those alternatives add cost and consume capacity elsewhere.
There’s an uncomfortable connection between the two sets of disruptions. Conflict has restricted shipping near major fossil-fuel reserves, while emissions from fossil fuels contribute to climate change and the drought affecting navigation in Panama and Europe. For businesses dependent on these routes, the practical takeaway is that shipping risk now comes from several directions at once, with both security conditions and water availability shaping how much freight can move.
Related reading: Russia Receives First Gasoline Cargo From India as Fuel Shortages Spread.