Israel War News: Since mid-November 2023, the Houthi militants in northern Yemen have been conducting armed attacks near the Bab-el-Mandeb strait. The Bab-el-Mandeb Strait connects the Mediterranean Sea to the Arabian Sea via the Red Sea and the Suez Canal and is vital for 30 percent of global container traffic.
The attack targeting commercial vessels linked to Israel by the Houthis comes in the face of Israel’s war in Gaza. The Houthi attacks have led to disruptions in business operations, especially supply chain operations. The disruptions are likely to continue and add to the Israel War News as the Israel-Gaza war drags on and Houthis escalate the attacks in the Red Sea.
The Houthis initially began drone and missile strikes in the southern part of Israel in October, after the beginning of Israel’s war in Gaza, but later started attacking ships passing through the Red Sea. As per the Israel War News sources, The first attack by the Houthis was reported on 19 November 2023, when they seized an Israeli-linked cargo ship.
The group announced that they would relent after Israel allowed entry of food and medicine to Gaza and stopped the hostile activities permanently. They aim to inflict economic costs on entities of interest to Israel and pressure Israel’s allies, such as the United States and the European Union (EU), to push for a ceasefire in Gaza. As of 01 January 2024, the Houthis have launched over a hundred drones and ballistic missile attacks against 20 commercial vessels.
Other Updates Relating to Israel War News
On 19 December 2023, the United States announced a 10-nation coalition consisting of the United Kingdom, Canada, France, Bahrain, Italy, Netherlands, Norway, Seychelles, and Spain to combat the threat of attacks by the Houthis in the Red Sea. A clash between the US forces and the Houthis was reported on 31 December 2023 after a container ship operated by Maersk was targeted.
The clash led to the sinking of three Houthi ships and the death of ten Houthi militants. Following the attack, Maersk announced a 48-hour suspension of activity in the Red Sea and later diverted five container ships around the Cape of Good. Similar to Maersk, over 32 shipping majors including BP, Hapag Llyod, and CMA CGM, have rerouted their shipments from the Bab-el-Mandeb strait to the longer Cape of Good to ensure physical security of personnel and carriages.
A few logistics majors have suspended all-cargo services to Israel. The traffic through the Red Sea has dropped by around 35% in recent weeks, resulting in increased shipping and insurance costs. The situation in the Red Sea continues to escalate as the Houthis refuse to halt the attacks even after a warning issued by a 12-country coalition, including the United States, United Kingdom, and Japan. On 11 January 2024, the United States and the United Kingdom launched military strikes in Yemen in response to the Houthi attacks.
Impact assessment:
1. The tensions in the Suez route have added to the existing pressures faced by the global shipping industry due to the aftermath of the pandemic, the Russia-Ukraine war, and the drought in the Panama Canal, constricting trade flows from the Pacific to the Atlantic. Rerouting shipments along the Cape of Good Hope is likely to cause the lengthening of the journey by about 40 percent, translating to a 30 percent rise in shipment cost, according to some estimates. The increase in shipment costs is likely to be reflected in the raised commodity prices.
2. The long-term disruption of traffic through the Red Sea will impact energy prices, particularly in Europe. A complete halt to oil shipments through the Suez Canal would be a significant disruption and would likely boost crude oil prices in 2024.
3. Rerouting of the ships due to increased tensions in the Red Sea disrupts shipping schedules. Delays in shipment can cause shortages of essential goods and affect the availability of electronics, machinery, and raw materials for manufacturing and other aspects of global trade. Delays can also be anticipated in returning empty containers to hubs in Asia.
4. A majority of the insurance companies have refused to cover shipments crossing the Red Sea after Houthi militants hit a Liberian-flagged ship Palatium III, with an anti-ship ballistic missile. Some insurance companies have also started to levy a war risk surcharge. Hence, the tensions in the Red Sea are likely to result in higher insurance payouts and the non-availability of cover for shipments transiting through the region.
5. According to Israel war news sources, The attacks have widespread geopolitical implications. Escalation of the situation could lead to the widening of the war beyond Israel and Palestine. The geo-economic risks associated with the attacks raise the pressure on Israel and its allies for a ceasefire.
The Houthis continue their attack in the Red Sea in support of Hamas, and hence, the disruption in maritime traffic is expected to continue until the attacks in Gaza continue. Shipping containers are likely to continue rerouting until the tensions are resolved. The military strikes in Yemen by the United States and the United Kingdom may lead to drawn-out tensions in the Middle East causing some more negative Israel War News.
Due to the critical importance of the Red Sea in the supply chain and trading routes, the tensions arising due to the Houthi attacks significantly disrupt various business operations. Businesses must account for the disruptions caused by the attacks and develop mitigation plans.
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Israel War News Sources:
1. https://www.vox.com/world-politics/2024/1/6/24027735/yemen-houthi-red-sea-united-states-navy-coalition-maersk-hamas-gaza-israel
16. https://www.aljazeera.com/news/2024/1/12/us-and-uk-launch-strikes-against-houthi-rebels-in-yemen
