Prices for oil and goods from the Far East under pressure: Will the Houthi attacks in the Red Sea make things more expensive soon?

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The US is already involved in the wars in Ukraine and Gaza. They are the largest arms supplier to Kiev and Israel. Now the Pentagon has announced a new military coalition: against the Houthi attacks in the Red Sea.

The attacks endanger international trade and threaten to drive up oil prices. Now the United States on Monday announced a ten-member coalition against the Houthi attacks.

The new ‘multinational security initiative’ called ‘Operation Prosperity Guardian’ also includes Britain, France, Italy, the Netherlands, Norway, Spain, Bahrain and the Seychelles.

Dilemma for the world community

US Secretary of Defense Lloyd Austin (70) spoke in a statement about the “challenge posed by these non-state actors. Countries that want to uphold the fundamental principle of freedom of navigation must come together.”

The first oil tankers and cargo ships are starting to avoid the region. A complicated situation for the international community. If safety on this important shipping route cannot be guaranteed, fuel and freight prices are likely to rise.

But too strong a military response also risks sparking a broader conflict and sending prices soaring.

Impact on world trade

Since the first Houthi attacks, oil prices have risen only slightly. On December 12, the price of a barrel of Brent was practically at its lowest point of the year, at $73.24. On Monday a barrel cost just over $78.

But prices for imports from the Far East are already being driven up. Due to the risks in the Red Sea, global shipping companies have halted routes for their cargo ships through the Red Sea, the Times of Israel reports. “Ships are being diverted to longer, more expensive voyages.” This will have consequences for world trade. Ten percent of it flows through the Suez Canal.

Swiss shipping company also sails around the Suez Canal

The Swiss shipping company MSC has also stopped the trips of its container ships through the Suez Canal. A company cargo ship was attacked by a drone while transiting the Red Sea on Friday.

The ship passage through the Red Sea connects the Indian Ocean with the Mediterranean Sea. The 40 percent longer route from the Far East to Europe around the Cape of Good Hope at the southernmost tip of Africa extends the journey by two to four weeks. In addition to delivery delays, this increases costs by as much as $1 million per freighter, according to the Times of Israel.

Hamas allies

The Houthi militias, backed by Iran and Hezbollah in Lebanon, control large parts of Yemen. The Houthis have declared solidarity with Hamas and have been attacking targets in southern Israel since October 7. US destroyers also intercepted drones during attacks on cargo ships.

The militias are now threatening to attack any ships they believe are heading to or coming from Israel. Only cargo ships delivering aid to the Gaza Strip will be allowed passage in the Red Sea. All others are “legitimate targets of our forces,” a Houthi statement said.

Source: Blick