The ongoing violence related to the Israel-Hamas war is causing major disruptions in shipping in the Red Sea. European oil and gas companies are rerouting their tankers away from Yemen, and container ships are being withdrawn from the region as Iran-backed Houthi fighters escalate attacks in support of Hamas. This has led to a rise in European natural gas prices and Brent oil futures, impacting global energy flows.
The closure of the Suez Canal in 2021 demonstrated the fragility of global supply lines when key connections fail. U.S. officials are scrambling to respond to the trade threat, with Defense Secretary Lloyd Austin convening discussions about dealing with the militants based in Yemen. The incidents are threatening a trade corridor that typically carries around 12% of maritime trade.
The attacks on ships are linked to the Israel-Hamas war, but the targeted vessels have no actual connection to Israel. As a result, the London-based Joint War Committee has expanded the portion of the Red Sea deemed risky, leading to increased insurance costs for ships. Containers ships are being rerouted around the southern tip of Africa and global shipping costs are rising. The situation is also causing short-term delivery delays and increased shipping costs for consumers.
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