Dear Reader,
The Strait of Hormuz is effectively closed. Now the Bab el-Mandeb is too. Two of the world's three critical oil chokepoints, blocked simultaneously. Brent crude is sitting at $104 a barrel this morning. Goldman Sachs says $120 if this holds. The mainstream is calling it a "shipping disruption." I call it the oil squeeze that was always coming.
Inside today's issue:
- The Second Chokepoint Falls: Iran-backed Houthis seized Perim Island on September 11. They now control the entrance to the Red Sea. 12% of world trade flows through that strait. Right now, barely any of it is moving.
- Saudi Arabia Is Trapped: The kingdom's oil routes just got cut from both ends. East-West pipeline to the Red Sea. Now the Red Sea exit is blocked too. This is not a regional conflict. This is an energy siege.
- The 1973 Replay: My rich dad warned me about this pattern in 1973. Every empire eventually faces the oil trap. We are watching it happen again in real time.
- Larry Benedict: Oil Skimming: Gas prices are skyrocketing right now. Here's what to do... (Brownstone Research)
THE DUAL CHOKEPOINT CRISIS
Let me give you the numbers CNN is not printing. The Strait of Hormuz carries 21 million barrels of oil per day. The Bab el-Mandeb carries 12% of all world maritime trade, plus Saudi oil destined for Europe and Asia. Both routes are now compromised.
On September 11, Houthi forces captured Perim Island. Perim Island sits at the mouth of the Bab el-Mandeb Strait. That is the southern exit of the Red Sea. The Houthis now have guns pointed at every tanker trying to leave the Red Sea heading east. Before that, they took the port city of Mokha. They control the entire Red Sea coastline of Yemen.
Reuters reported it plainly on September 10: "Houthi control of the Bab el-Mandeb Strait risks further disruptions to the flow of the kingdom's oil supplies to Asia."
"Houthi control of the Bab el-Mandeb Strait risks further disruptions to the flow of the kingdom's oil supplies to Asia. The militant group has already declared a naval blockade against Saudi Arabia, the world's largest oil exporter."
Saudi Arabia is now squeezed from two directions. The Iran war disrupted Hormuz traffic to the north. The Houthis are threatening the Red Sea to the west. Their East-West pipeline can carry seven million barrels a day. Total Saudi production is ten million. The math does not work. Some of that oil has nowhere to go.
I have been watching these patterns since 1973. The Arab oil embargo did not start as a global crisis. It started as a regional dispute. By the time OPEC cut output by 5%, gas lines stretched for miles. The difference now: we are not talking about a 5% cut. We are talking about the world's largest oil exporter being unable to move its product.
Goldman Sachs was blunt. If both chokepoints remain blocked, Brent could hit $120 by Q4. Brent was at $104 yesterday. Shipping companies rerouting around southern Africa add four weeks and $1 million per voyage. That cost gets passed to you at the gas pump, at the grocery store, in everything that moves by truck or ship.
The Fed just hiked rates 25 basis points last week. Inflation is still elevated. They believe higher rates will fix it. They will not. No interest rate in Washington can reopen a strait in Yemen. Tariffs plus an oil siege plus a hiking Fed equals a cost-of-living crisis that no committee vote will solve.
I have said this for fifty years: energy is money. Whoever controls the flow of energy controls the flow of wealth. The Houthis do not have an aircraft carrier. They have drones and geography. That is enough.
Here is the cycle call: this is not a temporary shock. The Strait of Hormuz took weeks to partially reopen after the U.S.-Iran MOU in June. Commercial traffic still has not fully returned. The Bab el-Mandeb is now the second front. Both will remain dangerous for months, maybe longer.
What can you control? The same thing my rich dad taught me: own the assets that rise when paper falls. When oil disrupts, gold confirms. When the dollar weakens under energy inflation, hard assets protect purchasing power. The 1973 embargo ended. The people who held oil royalties, gold, and real assets during it came out ahead. The people who held paper and savings accounts did not.
I am not waiting for the Fed to figure this out. They will not figure it out. That is not what they do.
Before I share exactly what I would do next, our friend James Altucher has identified something that connects directly to this energy crisis. The same geopolitical forces reshaping oil are accelerating a technology shift that created 1.8 million millionaires the last time it triggered. Take a look below.
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THE PLAY is straightforward: Own things the system cannot print. Gold. Silver. Oil royalties. Real assets that rise when paper gets squeezed.
The dual chokepoint crisis is not just an energy story. It is a dollar story. Every extra dollar spent on shipping, rerouting, and war-risk insurance is inflation the Fed cannot hike away. The 70s proved it. History does not repeat. But it rhymes.
I bought my first gold coin in 1965 for $35. The dollar has lost 98% of its purchasing power since then. Gold is now north of $2,800. That is not a coincidence. That is math.
Stay free. Stay liquid. Stay in real assets.
To your freedom,
Robert Kiyosaki
Author, Rich Dad Poor Dad
P.S. When the market crashed 37% in 2008, our friend Larry Benedict made $95 million for his clients. Now he is sounding the alarm on oil. He warns that high oil prices could strangle the U.S. economy. Yet where others see disaster, Larry sees one of the biggest opportunities in 40 years. Click here to see his strategy.