17-1-2024 (WASHINGTON) The US military conducted fresh strikes in Yemen on January 16, targeting anti-ship ballistic missiles in a region controlled by Houthi rebels. The strikes come in response to heightened tensions and a missile attack on a Greek-owned vessel in the Red Sea. The disruptions caused by Houthi attacks on Red Sea shipping are expected to impact consumer goods prices in Europe, particularly as the crisis unfolds.
The Iran-aligned Houthi militia has recently threatened to broaden its attacks, potentially targeting US ships, following American and British strikes on its sites in Yemen. The attacks on ships in the region since November have raised concerns and affected companies, prompting major powers to closely monitor the situation.
The White House confirmed additional US strikes on January 16, specifically targeting ballistic missiles that the Houthis were preparing to launch. Despite the military response, the White House emphasized that there is no intention to escalate the situation further and urged the Houthis to cease their reckless attacks.
The implications of Houthi attacks on Red Sea shipping are becoming increasingly evident. DP World’s Chief Financial Officer, Yuvraj Narayan, anticipates disruptions that will impact European imports. He highlighted that the cost of goods into Europe from Asia is expected to rise significantly, affecting European consumers and developed economies more than their developing counterparts.
War risk insurance premiums for shipments through the Red Sea are on the rise, and the impact is resonating across various industries. A missile struck a Malta-flagged, Greek-owned bulk carrier, the Zografia, in the Red Sea, prompting concerns about the safety of shipping routes in the region. The ongoing crisis has led to companies reassessing their operations, with some factories facing production halts due to delays in the delivery of raw materials.
As the situation evolves, global shipping operators are closely monitoring the developments. Japanese shipping operator Nippon Yusen (NYK Line) has instructed its vessels to wait in safe waters and is considering route changes. Meanwhile, shipping giant Maersk has continued its operations, sending container ships through the Red Sea, albeit with goods for the US military and government.
The impact on shipping routes, particularly those leading to the Suez Canal, a vital passage for world shipping, has prompted concerns. Container vessels are either pausing or diverting from the Red Sea, leading to increased traffic circumnavigating the Cape of Good Hope. The uncertainty surrounding shipping routes has prompted major companies like Shell to suspend all shipments through the Red Sea indefinitely.
In response to the escalating crisis, European Union member states are reportedly considering the creation of a naval mission to help protect ships. However, challenges persist as the existing US-led coalition lacks participation from regional powerhouses like Saudi Arabia, the United Arab Emirates, and Egypt.
UN Secretary-General Antonio Guterres has reiterated calls for all parties to avoid further escalation in the Red Sea. Saudi Arabia’s foreign minister emphasized the link between Houthi attacks on commercial ships and the ongoing conflict in Gaza, highlighting the need for de-escalation and a ceasefire in the region. The situation remains fluid, with diplomatic efforts underway to address the complex challenges posed by Houthi actions in the Red Sea.
