Red Sea / Houthi Escalation

Houthi attacks on Red Sea shipping paused alongside the Gaza ceasefire in late 2025, but Suez transit volumes remain 47% below the 2023 baseline and the recovery thesis has been materially complicated by the ongoing Hormuz crisis. Trump announced a naval blockade of Iranian ports on 14 July, converting the contested standoff into an active US-Iran naval confrontation. Through 27 August, Iran re-declared Hormuz closed multiple times while crude continued transiting. The Versailles framework collapsed on 25 August with secondary sanctions expansion described as imminent, eliminating diplomatic resolution as a near-term base case. Iran's $30,000 bounty on US soldiers and the expiry of the ceasefire framework without resolution compound the impasse. The US has extended its Iranian-conflict oil disruption projection to 600,000 bpd through 2027, embedding a structural oil-price floor with Brent oscillating between $85.70 and $94.39 across the week of 21-27 August. Repeated Houthi attacks on Saudi vessels through 27 August confirmed the March 2026 solidarity escalation remains operationally active. NthEffect maps the cascade from disrupted freight routes through tanker rate compression, fragmented supply chains, and goods-inflation transmission into Europe's import-heavy economies, alongside the defence-spending re-rate accompanying sustained chokepoint risk across two maritime arteries simultaneously.