The Red Sea shipping crisis
The oil giant BP has announced that it has diverted all shipments away from the Red Sea as Iran-backed Houthi rebels in Yemen increase the frequency of attacks on container ships.
The announcement comes after a surge in attacks last week that led to companies announcing temporary diversions. Another attack today on a ship near the port of Mokha in Yemen led to BP and Norway’s Equinor confirming that their ships will avoid the region.
The Houthi rebels have pledged support for Hamas and say they are targeting ships headed for Israel. However, most of the ships that have been attacked were neither headed for Israel nor linked to the country.
Rieber & Son, the company that owns the Swan Atlantic ship that was attacked today said: “There is no Israeli link in the ownership (Norwegian), technical management (Singapore) of the vessel nor in any parts of the logistical chain for the cargo transported.”
The increasing danger of the Bab al-Mandab Strait which sits between Yemen on the Arabian peninsula and Eritrea and Djibouti on the horn on Africa has serious potential ramifications for European and indeed world trade.
The Bab al-Mandab Strait leads into the Red Sea and Suez Canal which sees 12 per cent of global maritime trade pass through its waters. According to S&P Global Market Intelligence, almost 15 per cent of all goods imported into Europe, North Africa and the Middle East came through this sea route. Almost a fifth of Europe’s refined oil makes this journey. Europe has become particularly dependent on oil from this route since ending business with Russia after it invaded Ukraine. On the news that BP would be halting Red Sea journeys, the price of natural gas increased by 13 per cent.
The importance of this route cannot be overstated. According to the Suez Canal Authority, on Sunday alone 77 vessels and 4 million tons of goods transited the Canal. The diversion will take ships round Southern Africa past the Cape of Good Hope, adding at least 3,000 miles and 10 days onto any journey.
The root of this problem is Iranian activity and, of course, the Israel-Hamas war. Today there have been strong calls from senior Conservative politicians for a ceasefire, taking a lead from the foreign secretary yesterday. Writing in the Daily Telegraph, former defence secretary Ben Wallace said that by “obliterating vast swathes of Gaza” the Israeli government was “making the mistake of losing its moral authority alongside its legal one”. The past week has seen previously supportive states such as Australia and Canada vote for a ceasefire in the UN and the US, Israel’s staunchest ally, is urging serious restraint.
If this chaos in the Red Sea increases the price of goods, especially fuel in Europe, Israel could see more of its international support dwindle. The US will also come under pressure to keep the waterway open. It has a heavy naval presence in the region attempting to combat the attacks.
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