The Red Sea crisis intensifies as Yemeni Houthi rebels, fueled by anti-Israel sentiments, escalate attacks on commercial vessels, prompting major shipping companies to suspend operations and divert routes. In response, Western powers, led by the United States and the United Kingdom, launch coordinated airstrikes against Houthi targets in Yemen, with the Biden administration seeking to relist them as terrorists. The strategic importance of the Red Sea route, vital for global trade, faces disruptions, fueling concerns about economic impacts, inflationary pressures, and heightened tensions in the region as Houthi rebels remain defiant despite international responses.

In a series of aggressive moves starting in mid-November, Yemeni Houthi rebels, an Iran-backed group that considers Israel an enemy, initiated attacks on commercial vessels navigating the Red Sea with drones, missiles and speed boats. The rebels cited their actions as a direct response to Israel’s involvement in Gaza, marking a significant escalation in tensions in the region. The December 3rd missile strikes on three bulk carriers in the Red Sea by Yemeni Houthi rebels signaled a significant escalation in the threat to commercial shipping within the region. The situation escalated rapidly, with rebels launching 25 attacks on merchant vessels passing through the southern Red Sea and Gulf of Aden by January 4.

The Houthi militia, predominant in most of Yemen, targeted commercial ships traversing the critical passage connecting the Red Sea to the Gulf of Aden, specifically the Bab al-Mandeb Strait. This strategic waterway is situated in an area where the Houthis exert control, extending from Sanaa to the north-west of Yemen, encompassing the Red Sea coastline. The Houthis, who control Sanaa and the north-west of Yemen, including the Red Sea coastline, govern these regions de facto, collecting taxes and issuing currency. They perceive this strategic waterway as linked to Israel, causing significant tremors in the world economy still grappling with the aftermath of the Corona pandemic and the conflicts in Ukraine.

As a consequence, major shipping companies, including industry giants like Maersk, Hapag-Lloyd, and the Mediterranean Shipping Company (MSC), have opted to suspend shipping operations through the Red Sea trade route in response to the persistent attacks. This decision has set off a chain reaction, leading to heightened freight costs and longer delivery times.

THE STRATEGIC SIGNIFICANCE OF THE RED SEA ROUTE

The Red Sea and its associated waterways constitute one of the world’s most vital maritime trade routes, serving as a crucial artery for global seaborne trade. The Red Sea, a gateway connecting the Mediterranean Sea to the Indian Ocean, typically facilitates the transit of almost 15% of global seaborne trade. Recent attacks by Yemeni Houthi rebels have, however, disrupted cargo flows in this crucial shipping region, significantly impacting the feed additive market. The redirection of freights through South Africa due to the perceived risk in the Red Sea has led to soaring freight costs. Consequently, prices for essential feed additives such as lysine and threonine are experiencing an upward trend, posing challenges for the livestock and poultry industries.

The Bab al-Mandab Strait, a 20-mile wide channel situated between Eritrea and Djibouti on the African side and Yemen on the Arabian Peninsula, is a critical passage for ships traveling from the south to reach Egypt’s Suez Canal further north. Any vessel passing through the Suez Canal to or from the Indian Ocean must navigate through the Bab al-Mandab Strait and the Red Sea.

The Suez Canal, a linchpin in this maritime route, stands as the quickest sea route between Asia and Europe. This route is particularly crucial for the transportation of oil and liquefied natural gas (LNG). In the first half of 2023, approximately nine million barrels of oil per day transited through the Suez Canal, emphasizing its pivotal role in global energy transport. Nearly 15% of goods imported into Europe, the Middle East, and North Africa are shipped from Asia and the Gulf by sea. This includes a significant portion of refined and crude oil. Container ships passing through the Red Sea also carry a diverse range of consumer goods, such as TVs, clothes, trainers, and sports equipment.

Annually, around 17 thousand ships utilize the Suez Canal, representing approximately 12% of global trade. The total value of goods transiting through this route exceeds one trillion dollars, underscoring its unparalleled importance in facilitating international commerce.

WESTERN POWERS TAKE MILITARY ACTION, BIDEN TO RELIST HOUTHIS AS TERRORISTS

In a significant response to the escalating crisis in the Red Sea, Western powers, particularly the United States and the United Kingdom, have undertaken decisive measures to counter Houthi attacks on international maritime vessels. The U.S. and UK launched coordinated airstrikes against Houthi targets in Yemen, targeting 60 locations across 28 sites. US President Joe Biden emphasized that these strikes were a direct response to Houthi attacks on Red Sea ships, which posed threats to global trade and freedom of navigation. UK Prime Minister Rishi Sunak deemed the action as necessary and proportionate to safeguard global shipping interests.

In an effort to cut off funding and weapons supply to the Houthi rebels, the Biden administration is set to relist them as a terrorist group. This move follows additional U.S. airstrikes that successfully targeted Houthi anti-ship ballistic missiles, as confirmed by the White House. The administration aims to send a clear message that further attacks will not be tolerated.

While the U.S. and several nations deployed naval forces to the Red Sea under Operation Prosperity Guardian, France opted out of participating in the U.S.-led strikes to prevent regional escalation. The United Nations Security Council, with overwhelming support, approved a resolution urging the Houthi rebel group to cease its aggressive actions in the Red Sea.

During discussions at the World Economic Forum in Davos, concerns emerged about potential inflationary pressures and disruptions to European imports. The crisis is impacting various sectors, with rising war risk insurance premiums for shipments through the Red Sea. Additionally, manufacturing in Spain is facing setbacks, exemplified by four Michelin-owned factories planning to halt output due to delays in raw material deliveries.

A Malta-flagged, Greek-owned bulk carrier, the Zografia, was struck by a Houthi missile in the Red Sea. Though no injuries were reported, the incident raises concerns, leading to potential rerouting for safety checks. Meanwhile, Japanese shipping operator Nippon Yusen instructed vessels to wait in safe waters, considering route changes. In contrast, shipping giant Maersk continued its operations, sending two container ships through the Red Sea to deliver goods for the U.S. military and government.

Despite the international response, Houthi rebels remain defiant. They pledge to continue their aggression against commercial ships in the Red Sea, specifically targeting Israeli vessels. This defiance sets the stage for prolonged confrontations in the waterway, with the potential to draw Western powers deeper into the Middle East.

As the crisis unfolds, the world watches closely, balancing diplomatic, military, and economic measures to address the evolving threat posed by Houthi rebels in the strategically vital Red Sea region.