Houthi attacks arising new crisis for economy: major companies avoid seaways [COMMENTARY]

The tension in the Red Sea, caused by Iran-backed Yemen's Houthis, continues. On Tuesday, Houthis announced that, despite all attempts by the USA, they would stop attacking ships linked to Israel.

“Even if the United States succeeds in mobilising the entire world, our operations will not cease until the genocide in Gaza stops,” Mohammed al-Bukhaiti, a senior Houthi official, said in a post on X on Tuesday.

On the other hand, as one of the main international transport routes passes through the region, the tension concerns the whole world. Just 2 years ago, when the Panamanian-flagged container ship Ever Given in 2021 ran aground in the Suez Channel, prices in the world market rose. Many think that the world can face a similar problem again. British energy giant bp has already announced that it will avoid the Red Sea and reroute through Africa. Several international companies issued similar statements. It is worth noting that roughly 12 percent of global trade passes through the Red Sea, which connects to the Mediterranean Sea via the Suez Canal. Houthi attacks have effectively rerouted a significant portion of trade by forcing freight companies to sail around Africa, and of course, they impose higher costs and delays for energy, food, and consumer goods deliveries.

The crisis in the Suez Canal in 2021 was solved rapidly and did not last too long. However, many believe that the Houthi crisis in the Red Sea differs from the above-said one and can protract for an unknown time because the present crisis is being caused deliberately by an armed group. How long can it last, and what will be the consequences?

The British journalist and expert on energy issues, Neil Watson, in a comment for Azernews, noted that it is difficult to predict exactly how long the Houthi drone and missile attacks on shipping in the Red Sea will continue, but the actions of the Yemeni-based, Iranian-backed rebels are umbilically connected to the situation in Gaza and the Hamas-Israel conflict. He said that Houthis are deliberately targeting Israeli or Israeli-connected ships.

“Just a few hours ago, the US announced a 10-nation force to counter the attacks, and the coalition will include Bahrain, Canada, France, Italy, and the UK, according to US Defence Secretary Lloyd Austin. This may dissuade them from continuing this aggressive activity, but Mohammed al-Bukhaiti, a senior Houthi official and spokesperson, told Al Jazeera on Monday that the group would confront any US-led coalition in the Red Sea. Also, numerous Arab nations are expected to join the coalition, including Egypt, Jordan, and Saudi Arabia, which want to keep the Red Sea open. However, ultimately, a de-escalation in the Hamas-Israeli conflict is the only way past the impasse,” Watson noted.

He added that at least 12 shipping companies, including the Italian-Swiss giant Mediterranean Shipping Company (MSC), French CMA CGM, and Danish AP Moller-Maersk, have suspended transit through the Red Sea due to safety concerns. On Monday, BP became the latest firm to announce it would avoid the waters. Inevitably, this re-routing will cause a hike in the costs of oil and all commodities, as logistics costs and shipping times will escalate exponentially.

He also touched on the safety issues on the trade route in the Indian Ocean basin, such as private attacks, Houthis, and so on.

“The main issue is the lack of cohesion in and between the East and West at the present time and the mercenary nature of pirates, Houthi rebels, and others engaged in such activities. If countries worked together more effectively to combat such attacks and piracy and shared information more readily, these people would not take such risks for greed or as proxies of pariah regimes. However, the world is becoming polarised, and these groups capitalise on this. There is scope for new international organizations – not dominated by the US – to be established to make it clear that such behaviour is, and always has been, totally unacceptable and against international law. Those perpetrators and their backers run the risk of losing absolutely everything. Such a purely reactive act that we are seeing at present demonstrates the lack of agreement to combat such horrendous threats that have the potential to affect us all,” the expert concluded.