In recent days, the Red Sea has become like the mall during the holidays: a place better kept at a safe distance.
What happened: British oil and gas giant BP has paused all of its shipments through the Red Sea as Yemen’s Houthi rebels continue to attack cargo ships. The move comes after 5 of the 6 world’s largest shipping companies have stopped sailing in the Red Sea altogether.
Catch-up: The Houthis — an Iran-backed rebel group who control northern Yemen — began attacking all Israeli or Israel-bound cargo ships passing through the Red Sea in support of Hamas. However, attacks are now being directed at seemingly any cargo ship in the area.
- The rebels confirmed two new attacks yesterday, striking a Norwegian-owned ship and a Panamanian ship with drones.
Why it matters: The attacks could disrupt as much as 10% to 15% of global trade by cutting off access to the Suez Canal. Ships carrying goods like grain and oil between Europe and Asia will be forced to take longer routes, which will cause supply chain delays and higher prices.
- One analyst told Global these detours add at least a week of sailing time for ships. In response, European natural gas prices have already surged by as much as 13%.
Zoom out: There’s now limited access to two vital global trade arteries. Fewer ships are also sailing through the Panama Canal, which ferries ~5% of global trade, as the region’s worst drought in over 70 years has left the canal too dry to handle the usual number of ships.
What’s next: The U.S. is reportedly considering a direct strike against the Houthis in response to their attacks, but there are fears this could inflame high tensions with Iran.—QH