For over 150 years, the Suez Canal has served as a crucial link between the Mediterranean and the Red Sea, facilitating maritime trade between Europe and Asia by significantly shortening travel distances and consequently cutting costs for consumers. Indeed, 40 percent of Asia-Europe utilizes the Red Sea and Suez Canal instead of having to sail around the Horn of Africa, which, according to Noah Bermen of the Council on Foreign Relations, adds approximately $1 million more in fuel costs per round trip, not accounting for the multitude of other expenses trans-oceanic shipping requires. However, recently this vital route has become impassable for ships due to missile attacks by Houthi rebels, causing, as of this November, more than 150 commercial ships to choose the much longer and expensive route.
The Houthi rebels, also known as Ansar Allah, are a Shia Muslim insurgent group based in Yemen and formed in the 1990s by Hussein al-Houthi; formed to both end the marginalization and discrimination against the Zaidi Shia Muslim minority by the Yemeni government, and end the perceived foreign interference in Yemeni affairs by the United States and Saudi Arabia. The group gained prominence in the early 2000s through their opposition to the Yemeni government, culminating in their takeover of the Yemeni capital, Sanaa, in 2014, which ignited the ongoing civil war in Yemen.
However, most recently they have launched a series of long-range missile attacks on commercial ships in the Red Sea. These attacks, which continue unabated, target vessels indiscriminately, despite the Houthis’ claims of exclusively targeting ships with Israeli interests. This indiscriminate targeting has disrupted global supply chains and increased consumer prices during a fragile period of economic recovery from the COVID-19 pandemic.
As a result, the United States and Great Britain have responded by announcing an international security initiative to protect commercial vessels in the Red Sea, including a multitude of missile strikes on Houthi sites in Yemen to deter further attacks. However, concerns continue to linger among financial experts that such actions could escalate regional conflict, especially given Iran’s staunch support for the Houthi rebels. Furthermore, the Houthis’ willingness to engage in conflict with the United States and the potential for their attacks to reignite Yemen’s civil war further complicates the situation. The impact of these attacks extends beyond regional security concerns. The Red Sea serves as a vital artery in the global shipping network, with a substantial portion of container traffic passing through it. Any sustained disruption to trade in this critical maritime route could have profound repercussions for the global economy. Additionally, the redirection of shipping routes away from the Red Sea, coupled with increased insurance premiums and operating costs for vessels navigating the area, could contribute to higher prices for goods and commodities worldwide.
