How Red Sea blockade impacts global trade as Gaza war spills over | Explained


The Israel-Hamas war has escalated into a regional conflict, with pro-Palestinian Yemeni rebels attacking commercial vessels in the critical Suez Canal corridor in the Red Sea, prompting the formation of a US-led security coalition aimed at ensuring safety.

Yemen’s Iran-backed Houthi rebels say they were targeting ships heading to or returning from Israel in a bid to force Tel Aviv to suspend its invasion of the Gaza Strip, which has so far killed nearly 20,000 Palestinians following Hamas’ October 7 attack on southern Israel. However, owners of many ships claimed their voyages had no links with Israel.

International trade under attack

The militants, who control a sizeable territory of Yemen including the capital Sanaa, are using missiles and one-way attack drones or suicide drones to attack their targets. They have targeted at least 8 commercial ships since they announced support for Hamas – the first victim being the Liberian-flagged cargo ship Galaxy Leader on November 19. The attacks increased dramatically in the last few days as Israel ignored calls for a ceasefire in the face of a deepening humanitarian crisis in Gaza.

On December 11, a Norwegian-flagged commercial tanker, the Strinda, was targeted by an anti-ship cruise missile launched from controlled territory in Yemen when it was passing through the Bab-el-Mandeb Strait, which separates the Red Sea from the Gulf of Aden.

On December 15, the Houthis fired missiles at two commercial ships and dropped unidentified explosive objects on a cargo vessel.

Three days later, their naval drones attacked the MSC Clara and Swan Atlantic – the latter carrying Indian crews – when they transited the southern Red Sea off the Yemeni coast.

On December 17, US and UK warships shot down 14 drones in the Red Sea.

The attacks have instilled a sense of fear among seafarers. After the December 18 attacks, many ships broadcasted messages declaring they had armed guards onboard as they passed near the coast of Yemen.

On ship tracker Marine Traffic, many ships were seen flashing “ARMED GUARDS” as their destination.

Firms halt operations in Red Sea

The world’s biggest shipping companies like the Mediterranean Shipping Company (MSC), Maersk, CMA CGM Group, and Hapag-Lloyd along with oil giants like BP have announced to temporarily stop taking the Red Sea because of the “deteriorating security” situation. As per reports, BP said that it would keep its decision “under review” and continue to monitor the situation.

The Red Sea is a crucial maritime route, with about 10 percent of the global oil trade traversing its waters and approximately $1 trillion worth of merchandise passing through annually.

Its boundaries are marked by two slender passageways: the northern Suez Canal, situated in Egypt, and the southern Bab el-Mandeb Strait. This strait spans a mere 20 miles in width, flanked by Djibouti and Eritrea to its west and Yemen to its east.

In place of the Bab al-Mandab Strait, commercial ships will now have to take a much longer route navigating around the Cape of Good Hope in southern Africa, which will take around a week and millions of dollars more.

On December 17, Egypt’s Suez Canal Authority said that it had diverted 55 ships to the Cape of Good Hope since attacks began on November 19 in the Red Sea.

Higher oil prices on the cards?

Experts believe that oil prices could shoot up if more energy firms follow the footsteps of BP and if the marine traffic through the Red Sea remains affected for more than a week or two.

On December 18, international benchmark Brent rose by 2.6 per cent to almost $79 a barrel, as per BBC.

Reuters reported that Brent Crude futures rose 6 cents to $78.01 a barrel on December 19 as shipping companies re-routed their shipments away from the Red Sea.

“Given that there has been a prompt collective response from several countries to mitigate attacks, it may not provide much conviction that disruptions may be long-lasting, and that led to some reservations reflected in oil prices in today’s session,” Singapore-based market strategist Jun Rong Yeap told Reuters.

The sea is one of the world’s most important routes for liquefied natural gas shipments and consumer goods as well.

India joins maritime security efforts

The United States has announced a multinational security initiative named ‘Operation Prosperity Guardian’ under the already-existing security alliance, the Bahrain-based Combined Maritime Force (CMF). The new group, also comprising the UK, Canada, Bahrain, France, Italy, Netherlands, Norway, Seychelles, and Spain, will jointly address security challenges in the southern Red Sea and the Gulf of Aden.

In a statement, US defence secretary Lloyd J. Austin said the group will be led by CMF’s Task Force 153 – responsible for the safe passage of ships in the Red Sea – for “ensuring freedom of navigation for all countries and bolstering regional security and prosperity”. India became an associate member of Task Force 153 last year and is believed to be in the process of deploying an officer in Bahrain.

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“This is an international challenge that demands collective action,” Austin said, calling upon other countries to join forces against attackers who threaten “the free flow of commerce, endanger innocent mariners, and violate international law”.

As many as 19 US warships are believed to be in the Mediterranean, Red Sea, Gulf of Oman, Gulf of Aden, Persian Gulf, and Arabian Sea. The strike group USS Dwight D. Eisenhower has been mobilised from the Persian Gulf to the Red Sea.

The nuclear-powered aircraft carrier is manned by 3,200 crew, an estimated 2,480-member air wing, and can accommodate 90 fixed-wing fighter planes and helicopters. It was spotted in the Red Sea on satellite imagery on December 19.

The US Navy has at least three destroyers in the vicinity of the Bab-el Mandeb strait between the Red Sea and the Gulf of Aden – USS Carney, USS Mason, and USS Thomas Hudner. The UK Royal Navy guided-missile destroyer HMS Diamond and the French Navy guided-missile frigate FS Languedoc have operated in the Red Sea as well, according to the US Naval Institute.

Researchers pointed out that India’s stealth guided-missile destroyer INS Mormugao, which chased MV Ruen ship following its kidnapping by Somali pirates, has turned south and is believed to be operating in the Indian Ocean just outside the Gulf of Aden.

The attacks are particularly a headache for the US whose air bases have come under attack in Iraq and Syria from forces backed by Tehran, who has a longstanding desire to expel the US out of the Middle East.

Published By:

Ashmita Saha

Published On:

Dec 19, 2023




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