The US has announced it’s leading a coalition of 10 navies to secure the Red Sea, following a spate of Houthi attacks on civilian ships using drones, armed boardings, and missiles.
The Iran-backed Houthis describe their continued actions as a “victory for the oppression of the Palestinian people”, and say they’ll “continue to prevent all ships heading to Israeli ports” until food and medicine is delivered to Gaza.
We covered this situation last month,but the attacks have since become both more frequent (the most recent one dates all the way back to yesterday) and more destructive (a ballistic missile struck a Norwegian-flagged tanker last week).
Oil and gas giant BP, plus major shipping companies like Maersk, MSC and Hapag-Lloyd, have announced they’re pausing shipments through the Red Sea. And maritime traffic is bunching up as other companies play wait and see.
Considering the Red Sea is one of the world’s busiest trade routes, the impacts here are real:
- Shipping -Having to go the long way around Africa adds a couple of weeks to each ship’s journey, plus hundreds of thousands of dollars to each journey’s costs, while insurance premiums spike
- Energy – Oil prices jumped 1% and European gas prices were up as much as 7% yesterday as markets digested the link between shipping and energy costs, though supplies are broadly pretty robust right now
- Egypt -The companies now saying they’ll pause shipments account for 70% of total capacity through Egypt’s adjacent Suez Canal, putting billions in fees at risk for a country already in economic crisis, and
- Yemen – The Houthi-dominated country’s impoverished people rely on shipping for continued access to aid and basic supplies.
So what are the world’s options?
According to commodities expert Javier Blas, the world can now either “bomb or bribe” the Houthis to stop.
And the Houthis aren’t so easily bombable either, already enduring a brutal war with the Saudis, who are now pressuring the Iranians to intercede to help avoid another escalation.
Given the state of the world, the US is backing that more measured Saudi approach for now, while bolstering Red Sea defences via this new coalition.
The standing US Navy was itself created in 1794 after pirates in the Mediterranean had threatened US merchant shipping.
230 years later and a few hundred miles away, very little of the shipping now under threat in the Red Sea is actually US-flagged (many ships use flags of convenience). And the last thing the US wants is to get drawn into Yemen.
But this doesn’t mean US interests aren’t at stake. To the contrary, keeping sea lanes open has always been a core interest for major trading nations.
So Washington’s approach seeks to defend that core interest, but share both the burden and risk with other mostly trading nations like Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles, Spain and the UK.
Also worth noting: