The Ansar Allah movement, often referred to as the Houthis in reference to the ethnic group that makes up their base, has been attacking Red Sea shipping since the start of Israel’s bombing of Gaza. The group hijacked an Israel-linked ship on 19 November and have fired missiles at Israel’s Red Sea port, Eilat (one of which failed and exploded in Egypt).
Since then, there have been at least 12 successful attacks on commercial ships as of 26 December. But there have been many more unsuccessful ones, with missiles and drones shot down by US and French warships.
The attacks could have major commercial implications, with some 30% of global shipping passing through the Red Sea and Suez Canal. To pass instead around the southern tip of Africa, one analysis puts the increase in shipping time on this route at 9 days and the cost increase at 20%.
On 15 December, Denmark-based Maersk was the first major player to pause shipments, but announced a resumption on Sunday. Another major shipper, Germany’s Hapag-Lloyd, is currently planning to divert at least 25 container ships and has not announced when it will resume shipping.
IKEA and BP have already warned of delays in shipments and supplies.
The US-led response has brought warships from UK, France, Italy and Greece to the Red Sea. The Australian government declined to participate, with Albanese telling media, “Our resources have been prioritised in our region, the Indo-Pacific.”
Analysts at Politico have called the blockade America’s Suez Crisis. The crisis in 1956 signalled the end of British and French hegemony, when the two waning powers sought to seize control of the Suez Canal following its nationalisation by Egypt.
While this comparison is premature, it is difficult to see how the Houthi attacks could be forcibly shut down. The Houthis seized power in Yemen in 2014 and were only driven out of the capital by a full-scale ground and air campaign from an anti-Iran coalition led by Saudi Arabia, which enjoyed logistical support from the US and UK satellites and military officials.
Moreover, while threatening drones can be manufactured cheaply, the navy missiles that intercept them cannot. In the words of one analyst, “The conflict in the Red Sea is a harbinger of what the future holds as the diffusion of low-cost but increasingly capable weapons systems continues.”
Thus it is likely the US and Saudi-backed Yemeni government, which rejects the Houthi claims, will be driven to the negotiating table. But with this new bargaining chip in hand and negotiations in the works, the Red Sea attacks may in fact continue past the point when Israel’s bombing of Gaza ceases.
Feature image of Port Said courtesy of @rafikwahba via Unsplash.
Sign Up To Our Free Newsletter To Receive Our Upcoming Report On A Low P/E Stock With An International Growth Runway