Oil giant BP announced the suspension of all its shipments through the Red Sea, amid escalating attacks on commercial vessels by Iranian-backed Houthi rebels based in Yemen. The move follows other major companies in halting operations within the vital trading route, revealing a rapidly growing security concern.
Within the southern part of the perilous waters, US military forces have promptly responded to protect commercial vessels coming under fire. Over the past weekend, the military reportedly shot down 14 drones targeting these financial life-lines. Despite the preventative action, these threats continue to disrupt global trading routes and pose an immediate risk to the global economy.
As the situation continues, there is a growing urgency to ensure this dispute does not descend into a full-blown conflict between the US and the Houthis, with the latter's backing by Iran further complicating the already delicate relations. The Biden administration is keen to internationalize the response to these incidents, ensuring this does not evolve into an exclusive US-Iranian conflict and unnecessarily expand the ongoing war in Yemen.
The US however remains the primary force responding proactively to these attacks, shooting down numerous missiles and drones. Despite their efforts, some threats get through, causing shipping companies to recoil from the risk and eventually suspend their activities in the disturbed trade route. Leading shipping companies such as Maersk have already retreated, and this is dramatically affecting the amount of goods passing through the canal.
The onslaught has created an effective blockade in the southern part of Red Sea, disproportionately affecting the Israeli port in said region. The situation remains complex with differences within the allies on how to respond. While some favor forceful military action, others advocate for diplomatic solutions. Answers are yet to materialize, and in the meantime, the world may start to feel the cost.
Experts speculate that oil transport through the canal has reduced to a third of regular volumes, creating a ripple effect on oil prices globally. International traders are forced to reroute through the more costly and longer southern tip of Africa, giving an unanticipated twist to an already complex global trading environment.
In spite of the overwhelming US naval presence in the region, the deterrent effect appears to be dwindling. The Houthis and Iran have an interest in 'stirring the pot,' causing international concern and potentially reshaping global trading routes until a solution is found.
