Updated December 19th, 2023 at 14:31 IST
Yemen's Houthi rebels snarl Red Sea, raising oil prices and supply chain jitters
The Houthis, who control much of northern Yemen, began targeting ships after Hamas-led assaults on Israel on October 7th.
Global oil prices surged on Monday after energy giant BP halted tanker traffic through the Red Sea, a crucial shipping artery increasingly perilous due to Houthi drone and missile attacks. BP's decision, citing "deteriorating security," followed a weekend of intensified assaults on merchant vessels by the Yemeni rebel group, backed by Iran.
The escalation triggered immediate action, with a US-led coalition of at least nine nations joining forces to secure the Red Sea. Defense Secretary Lloyd Austin III announced the initiative Monday night, highlighting the "threat to free commerce, innocent lives, and international law" posed by the Houthis. Britain, France, Canada, Italy, Norway, and Spain are among the coalition members, whose navies have already thwarted Houthi drone attacks in the region.
Here is what you need to know
The Houthis, who control much of northern Yemen, began targeting ships after Hamas-led assaults on Israel on October 7th. They've threatened Israeli-owned and operated vessels, as well as those bound for Israeli ports.
According to a report from the New York Times, in response to the growing insecurity, major shipping companies like Evergreen, Hapag-Lloyd, Maersk, and Mediterranean Shipping have recently suspended Red Sea operations. Continued attacks could force a long-term shift away from the Suez Canal, disrupting oil flows from Saudi Arabia, Iraq, and other producers to Europe and beyond.
While US production increases eased pressure on oil prices earlier, any prolonged disruption to the Red Sea or Suez Canal could severely impact global markets. Brent crude, the international oil benchmark, jumped over 2% on Monday, nearing $80 a barrel. The US and its allies face a delicate task: ensuring safe passage for vessels while avoiding escalation with the Iran-backed Houthis.
What are the Houthis saying?
Meanwhile, tensions remain high. Mohammed Ali al-Houthi, a senior member of the rebel group, defended the attacks on social media, calling them a response to Israel's Gaza offensive. He accused the US of hypocrisy, stating they have "no right to speak about international law" given their actions in the region.
The coming days will be crucial in determining the fate of the Red Sea as a key oil artery. The success of the US-led coalition and its ability to de-escalate the conflict will play a decisive role in stabilising global oil markets and ensuring the free flow of commerce through this vital waterway.
Published December 19th, 2023 at 14:31 IST