Houthi attacks in the Red Sea and U.S. and British strikes against their targets have disrupted shipping, boosted oil and gold prices, and hit revenue from the Suez Canal, according to recent reports.
Shipping companies have altered their routes in response to the escalating tensions, with at least four oil tankers changing course and turning around mid-voyage to avoid the Red Sea. The Houthi rebel attacks, which have targeted commercial ships, have heightened concerns about the safety and security of the region.
In a further show of escalation, Iran recently seized an oil tanker carrying Iraqi crude near the Strait of Hormuz, another key waterway for global trade.
As a result of these developments, multiple shipping companies have chosen to avoid the Red Sea, citing increased risks. Dantom Shipping Group has suspended all sailing operations through the southern Red Sea, while Hafnia Shipping Company has ceased ships from sailing to or near the Bab el-Mandab Strait. Other companies, such as Swedish shipping company Stena Bulk, have also halted shipping in the Red Sea.
The actions of the shipping companies come in response to air and sea strikes carried out by the United States and Britain against Houthi rebel targets in Yemen. Meanwhile, major shipping companies Maersk and Hapag-Lloyd have cautiously welcomed measures aimed at ensuring security in the region, though they have not confirmed whether these actions would be enough for them to resume operations to the Suez Canal, an essential shipping route.
The impact of the conflict on the shipping industry has been significant, with Germany’s Hapag-Lloyd AG reporting additional monthly losses estimated at tens of millions of dollars from the attacks on ships in the Red Sea. The attacks have had a “significant impact” on the industry, according to a company spokesman.
Oil prices have surged by over 4% due to the geopolitical risks, leading to Brent crude oil trading above $80 before falling to around $78.3. Similarly, gold prices have also risen, with the precious metal’s appeal as a safe-haven asset increasing in the wake of the air strikes in Yemen.
The disruptions have also taken a toll on the Suez Canal’s revenue, with the canal’s dollar earnings experiencing a 40% decrease since the start of the year compared to the same period in 2023. Ship transit traffic has dropped by 30% year-on-year, with the number of ships passing through the Suez Canal falling to 544 so far this year, down from 777 in the same period last year.
As tensions continue to escalate in the region, the impact on global trade and shipping routes remains a cause for concern.