Chokepoints and Consequences: Mauritius at the Crossroads

Economy & Geopolitics

The government has less room to manoeuvre than before, and recent crises have highlighted the need to strengthen resilience before the next shock

By Manisha Dookhony

On Thursday, Yemen’s Iran-backed Houthi movement attacked two Saudi oil tankers, the Encelia and Layla, in the Red Sea near the Bab el-Mandeb strait. This marks the first such attack since the Houthis declared a blockade on Saudi-linked shipping, retaliating for the Saudi-led coalition’s blockade on Yemen and a recent strike on Sanaa’s international airport. Prior to that, the re-ignition of the war between the US and Iran and the situation in the Strait of Hormuz presented a sharp escalation of what was already a complicated geo-economic issue, leading Brent crude to briefly breach $100 a barrel for the first time since May.

Houthis attack Saudi tankers. Pic – ET

The strategic implications are profound. The Bab el-Mandeb is not just another waterway; it is a vital chokepoint at the southern tip of the Arabian Peninsula connecting the Red Sea to the Gulf of Aden, serving as the gateway to the Suez Canal through which approximately 12% of global trade and nearly a quarter of container traffic between Europe and Asia passes. The Houthi threat has already caused ships to turn back, and analysts warn that even selective attacks can create enough uncertainty for insurers to raise wartime premiums dramatically and prompt carriers to reroute around the Cape of Good Hope, adding roughly ten days of sailing time. This new threat is especially critical because Saudi Ara“““““““““““““““““““““““““““““““““““““““““““““““““`bia had been routing much of its oil through the Red Sea port of Yanbu precisely to avoid the fighting around the Strait of Hormuz, meaning the Houthi attacks have effectively closed this “alternative route,” creating a “double blow” to global oil transport.

The Strait of Hormuz handles roughly a quarter of the world’s seaborne oil, and any tension there sends freight costs climbing and delivery schedules into disarray. Now, the Red Sea and Bab el-Mandeb have also become flashpoints, complicating Suez Canal traffic, while the Black Sea remains tense. The result is cascading disruptions through almost every major artery of Mauritius’s import-dependent system.

The fuel import bill is the most immediate channel of impact. Petroleum already accounts for about a fifth of total imports, so when global oil prices spike, the effect is felt immediately, feeding directly into higher costs for electricity, transport, manufacturing, and food production. The pass-through to consumers has been partially absorbed by the government through the Price Stabilisation Account, but this has its limitations. A partial easing of global oil prices following a fragile US-Iran framework helped bring crude prices back towards US$80 per barrel, providing some relief and contributing to inflation moderating to 3.7% in June from 4.3% in May.

Another important channel of impact is tourism and foreign investment. The temporary suspension of Emirates flights earlier this year served as a reminder of Mauritius’s fragile connectivity and how investor confidence can be affected when major transit hubs are disrupted. Given that Emirates carried nearly 309,000 tourists to Mauritius in 2025, the suspension underscored the country’s vulnerability to external geopolitical shocks.

Weaker global demand and heightened uncertainty also threaten foreign direct investment and flows through the Mauritius International Financial Centre, as we are also increasingly linked to the Dubai IFC. On top of all this, Mauritius’s strategic petroleum reserve is inadequate for our level of development — there is a need to expand our storage capacity — and this is a vulnerability now magnified by simultaneous disruptions across multiple chokepoints.

Mauritius is likely to face a fresh wave of imported inflation affecting fuel, food, transport, and other essential goods should the situation be expansive in time. Growth forecast is down to 2.8% for 2026, from an earlier 3.3–3.5%, and inflation is expected to climb to around 5.5% if oil averages US$90 a barrel. But inflation is not just about the price tag; it is about time. Ships that used to take a month are likely to take longer, and that delay alone creates cost pressures across multiple sectors, from construction materials to retail goods. So, while the official inflation figures may show a gradual uptick, the real pressure on household budgets can appear much more abruptly, within weeks of a shipping delay or a fresh spike in crude prices. Because Mauritius imports so much of what it consumes, from rice to diesel to machinery, that imported inflation does not linger at the docks; it moves straight onto shop shelves and into our bills.

The government has stepped in quite heavily to protect consumers, most visibly through the Price Stabilisation Account. There is also a broader Price Stabilisation Fund, which subsidises essentials like milk powder, edible oil, rice, canned food, and flour, and price controls are in place on essential items, with fixed prices on strategic goods like bread, gas, and rice. The government is trying to shield consumers, but this comes at a cost that is difficult to maintain. Public finances are already constrained, with a debt-to-GDP ratio above 85%, and such universal subsidies are expensive.

Our foreign exchange reserves are in a much stronger position than they were during the COVID-19 pandemic, which gives us more breathing room to manage currency volatility — that is a genuine improvement. But the fiscal picture is tighter now: our debt-to-GDP ratio is above 85%, so the government has less room to manoeuvre than it did during earlier crises. These crises have exposed deep structural vulnerabilities, and while we are better off in some areas, the real lesson is that we cannot afford to wait for the next shock to build resilience.

Mauritius Times ePaper Friday 24 July 2026