New York – October 12, 2026 -- Egan-Jones Ratings says inexpensive missiles and drones have given Shiite groups leverage over the chokepoints that carry Middle East petroleum exports, with consequences for global trade and credit markets.
Houthis seize Mayun island as drone strike shuts Saudi pipeline
Yemen-based Houthis have taken control of Mayun, a strategic island in the Red Sea. Saudi Arabia's cross-peninsula pipeline was shut after drones launched from Iraq struck it. Saudi Arabia has fought the Houthis for the past decade without success, which Egan-Jones attributes partly to Yemen's mountainous terrain and the fighters' persistence.
The firm contrasts this with the trading system built over several centuries, in which surplus output moved by sea at low cost and petroleum exports later underpinned manufacturing worldwide. Shiite strongholds now sit at the major chokepoints for those exports. Weapons cheap enough to be used at scale have narrowed the gap between a small armed group and a state.
Egan-Jones sees little prospect of a military remedy
The United States is reluctant to repeat the prolonged campaigns of Afghanistan and Iraq, and the European Union is preoccupied with Ukraine. China, India and Japan are exposed but can draw on other suppliers and are shifting toward electric vehicles. U.S. vessels cleared mines near the Strait of Hormuz, yet Egan-Jones considers missile and drone attacks a continuing threat.
Iran's currency has lost about 91.9% against the dollar since 2021
The Western approach relies on economic pressure. Iran's currency weakened from roughly 186,500 per dollar in 2021 to about 2.3 million in September 2026. Egan-Jones cautions that currency deterioration alone does not guarantee political change.
Prolonged export curtailment would cost far more than a negotiated deal
Egan-Jones says a negotiated arrangement covering the movement of petroleum, accompanied by wider nuclear proliferation in the Gulf, would be unpalatable but manageable over time.
Sustained curtailment of regional energy exports would be far costlier. It would force adjustments in food production, which depends on petroleum-based fertilizer, and in transportation. It would also weigh on global output while sovereigns and other borrowers already strain to meet obligations. The firm published the analysis so institutional investors and risk managers can weigh those conditions early.