Attacks by the Houthi group in the Red Sea and the strikes carried out by the United States and Britain on targets associated with the group have led to disruptions in shipping movements and have pushed oil and gold prices upwards, while also impacting the revenues of the Suez Canal.
Shipping Companies Alter Routes
Shipping data from the London Stock Exchange group and global trade information platform Kepler showed that at least four oil tankers changed their routes away from the Red Sea following strikes by the United States and Britain on Houthi targets in Yemen, amidst growing concerns of escalating tensions.
The Houthis have been targeting commercial ships since late last year with attacks that the group says are in support of the Palestinians amid the Israeli war on the Gaza Strip. The attacks have been focused on the Bab el-Mandeb Strait area.
In another sign of escalation, Iran seized a tanker carrying Iraqi crude oil headed for Turkey on Thursday. This incident occurred near the Strait of Hormuz, another vital shipping passage for global trade.
The Houthi's seizure of the "Galaxy Leader" shipping vessel last November due to the ramifications of the war in Gaza (AFP)
Tankers 'Toya', 'Diana A', 'Stolt Zulu', and 'Navigate Pride LHJ' were seen turning back mid-journey to avoid the Red Sea on Friday, according to ship tracking data.
The data showed that one of the tankers, 'Toya', a giant crude carrier capable of carrying up to two million barrels of oil, was empty. The other three ships are fuel tankers.
A number of shipping companies have already chosen to avoid the Red Sea area in recent weeks due to increasing risks.
Denmark’s Torm shipping group announced on Friday that it has decided to temporarily suspend all navigation through the southern Red Sea.
Similarly, Hafnia Shipping Company stated on Friday that it has decided to immediately halt all vessels heading towards or near the Bab el-Mandeb Strait.
A Hafnia statement indicated that this decision was made following advice from the Combined Maritime Forces to stay away from the area after US-British airstrikes against the Houthi group in Yemen.
Stena Bulk shipping also informed Reuters that it had stopped transiting the Red Sea early on Friday.
Cautious Welcoming
Major shipping companies Maersk and Hapag-Lloyd welcomed measures targeting the security of the area, but neither company clarified whether the US-British airstrikes would be sufficient for the resumption of navigation operations leading to the Suez Canal, which is the fastest route between Asia and Europe and is traversed by about 12% of the world's container carriers.
German maritime shipping company "Hapag-Lloyd" stated that the attacks by the Houthis on ships in the Red Sea have caused it to incur additional monthly costs estimated in the tens of millions of dollars.
A spokesperson for the group did not assess the international military strikes led by the United States and Britain against Houthi positions but said, "We welcome measures that make passage through the Red Sea safe again."
Reuters reported that the International Association of Independent Tanker Owners (INTERTANKO) issued a memo to its members stating that the Combined Maritime Forces (CMF) warned all ships "to stay at a considerable distance from the Bab el-Mandeb Strait."
INTERTANKO added that "the threat period to shipping operations is expected to last several days." Approximately 10% of global trade passes through the Red Sea.
Oil Markets in the Eye of the Storm
Oil prices jumped 4% as oil tankers diverted their course from the Red Sea following airstrikes and naval strikes by the United States and Britain on Houthi targets in Yemen in response to attacks launched by the group since late last year.
Brent crude trading prices exceeded $80 due to heightened geopolitical risks before retreating to around $78.30.
West Texas Intermediate crude also rose 4% above $75 before settling near $73 in evening transactions.
Analysts at ING mentioned in a briefing that more than 20 million barrels per day of oil move through the Strait of Hormuz, which amounts to about 20% of global consumption.
Gold Benefits
Gold prices rose on Friday due to the airstrikes on Yemen, enhancing the appeal of the precious metal as a safe haven.
As of 20.33 GMT on Friday, spot gold rose 0.9% to $2,046.62 an ounce.
US gold futures also climbed around 2% to $2,050.90 an ounce.
Kelvin Wong, Chief Market Analyst for Asia-Pacific at OANDA, said the focus would be on the increasing geopolitical tension, which he views as escalating in degree, supporting "gold prices above the 50-day moving average of $2,015."
The number of ships passing through the Suez Canal has dropped to 544 so far this year (Al Jazeera).
Suez Canal Suffers
The Chairman of the Suez Canal Authority, Osama Rabie, said that the canal's dollar revenue has decreased by 40% since the start of the year compared to 2023, after Houthi attacks in Yemen on ships heading for Israel led to a rerouting of their navigation away from this passageway.
Rabie told a television program that ship transit has fallen by 30% from January 1 to January 11 of this year on a yearly basis.
He further detailed that the number of ships crossing the Suez Canal has dropped to 544 so far this year, compared to 777 ships during the same period last year.
