Warning of ‘New Shock’ to World Trade: Houthi Rebel Attacks in Red Sea Worrying World Powers, Including America?

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Warning of 'New Shock' to World Trade: Houthi Rebel Attacks in Red Sea Worrying World Powers, Including America?

Attacks by Yemen’s Houthi Rebel on cargo ships crossing the Red Sea have alarmed the world.

It should be remembered that the Houthi rebels control most of Yemen and after Israel bombed Gaza, the Houthi rebels have launched a new series of attacks against commercial ships coming and going to Israel. Faced with this situation, many large cargo marketing companies are forced to divert or stop their ships.

A Houthi rebel helicopter is seen hovering over a ship passing through the Red Sea.

Experts have told the BBC that if ships are forced to take alternative routes to protect themselves from attacks in the Red Sea, the prices of everyday goods, including petroleum products, electronic devices and sneakers, will rise. , will increase. (shoes), could increase. It can increase from

Major shipping companies have begun to avoid taking many of their ships through the Bab al-Mandab Strait at the southern end of the Red Sea, following an increase in Houthi attacks on commercial ships. .

The Red Sea Route is vitally important to the global economy: an estimated 12 percent of world trade currently passes through the Suez Canal at the northern end of the Red Sea. It also includes 30 percent of the world’s containers in cargo trade passing through it.

The oil major ‘British Petroleum’ has now joined the companies that announced the suspension of maritime transport through the Red Sea following the increase in attacks by the Houthi rebels.

Previously, the world’s major shipping companies, such as Maersk, suspended their ships on this important trade route.

The Houthi attacks follow Israeli military strikes in Gaza in early October in response to an operation by Palestinian militants when the Houthis declared their support for Hamas.

It should be remembered that more than 19,000 Palestinians have died as a result of Israeli bombings, including a large number of children.

The Houthi rebels said they were using drones and rockets to attack commercial ships bound for Israel, although it was not clear whether all the ships attacked were actually headed for Israeli territory.

Many major companies such as British Petroleum, ‘OCL’ of Hong Kong, ‘Maersk’, ‘Hopock Lloyd’, ‘MSC’ and ‘CMACGM’ now use the Suez Canal through the Red Sea. The route has suspended operations and is now diverting its ships to the ‘Cape of Good Hope’ in South Africa.

Shipping costs are already rising as a result of the attacks. Now the change of route will increase costs even more as it will mean an additional cost for companies.

A maritime security company told the BBC there is now a huge increase in demand for armed security personnel on ships in the region.

Embry said the cost of travel insurance has also increased significantly, now going from 0.015 percent to 0.5 percent.

It may seem like a small difference, but even that difference can add tens of thousands of dollars to a commercial ship’s cruise.

Abandoning the Red Sea route would increase the cost of shipping, insurance and other maritime logistics services by up to 30 percent, experts who spoke to the BBC said, with the additional costs passed on to consumers. .

Red Sea Houthi Rebel : Why an important route?

The Red Sea is one of the world’s most important waterways for transporting oil and liquefied natural gas, as well as raw materials.

A recent analysis by consulting firm S&P Global Market Intelligence found that about 15 percent of goods imported from Asia and the Gulf to Europe, the Middle East and North Africa are shipped through the Red Sea. These include 21.5 percent of refined oil and more than 13 percent of crude oil products.

Houthi rebels have begun attacking ships passing through the Mandab Strait, also known as the “Gate of Tears.” It is a 32 km wide channel and is considered dangerous for shipping.

It is located between Yemen on the Arabian Peninsula and Djibouti and Eritrea on the African coast.

It is the route by which ships can reach the Suez Canal from the south, an important maritime route.

In the latest attack, the owner of the MT Swan Atlantic said the ship was hit by an “unknown object” on Monday in the Red Sea off Yemen that had no connection to Israel.

Maersk is the second largest shipping company in the world. He announced last week that he would suspend shipping on the route after one of his ships narrowly escaped being destroyed in the attack and described the attack on another as a “dangerous situation.”

MSC, the world’s largest shipping group, said then that its ships would avoid passing through the area.

On Monday, one of the world’s largest shipping companies said it would no longer transport Israeli cargo through the Red Sea.

In an update seen by the BBC, Evergreen Line said: ‘For the safety of ships and crew, Evergreen Line has temporarily decided not to accept Israeli cargo immediately and will continue to operate its container ships. Ships have been ordered to refrain from sailing in the Red Sea until further notice.

Reaction of world powers / Houthi Rebel

Due to these Houthi attacks, the United States has launched the international naval campaign ‘Operation Prosperity Guardian’ to protect ships on the Red Sea route.

Among the countries involved in this security action are the United Kingdom, Canada, France, Bahrain, Norway and Spain, along with the United States.

The United States has also said it would appreciate China playing a constructive role in trying to prevent further attacks.

A senior Houthi official, Muhammad al-Bakhiti, wrote on X (formerly Twitter): “Even if the United States manages to mobilize the entire world, our military operations will not stop.” It doesn’t matter how many sacrifices we have to make for it.

US Defense Secretary Lloyd Austin held a virtual meeting with ministers from more than 40 countries on Tuesday and called on more countries to contribute to maritime security efforts in the Red Sea.

Results for Houthi Rebel

Instead of using the Bab al-Mandab Strait to avoid Houthi attacks, ships will now have to take the long route through South Africa, potentially adding about 10 days to the journey and costing millions of dollars. It will cost dollars.

Chris Rogers of S&P Global Market Intelligence said it would have “the biggest impact on consumer goods, although current disruptions are occurring during the off-pack shipping season.”

Evergreen Line said any container ships on long-distance voyages between Asia and the Mediterranean, Europe or the US east coast would also pass through the Cape of Good Hope.

Shipping companies will now try to inform customers that cargo may be delayed, said Peter Sand, chief analyst at freight rates data company Zenita. He added that “as a result of this situation, consumers will definitely have to pay a price.”

He said the business industry will also face impacts such as higher insurance premiums. But he also said shipping companies are in a better position to deal with the crisis than in 2021, when a major shipwreck, the Everglades, blocked the Suez Canal, halting shipping traffic for days.

Sue Trpelowski, of the Chartered Institute of Logistics and Transport, also noted that war risk insurance costs, in addition to additional fuel and time costs, are rising “rapidly” and consumers will also face higher prices as a result. .

Analysts suggested that oil prices could rise further if other major oil companies follow the same decision as BP. Houthi Rebel

Eurasia Group analyst Gregory Brew said it was unclear at this time how significant the impact would be.

“If more shipping companies divert their ships and the disruption continues for more than a week or two, prices are likely to continue to rise,” he said.

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