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Yemen’s Houthi Attacks Impact on Global Trade

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Yemen’s Houthi Attacks Impact on Global Trade

Yemen's Houthi attacks disrupt global trade, affecting supply chains and economic stability, signifying the consequences of supporting Israel’s war on Gaza.

The Houthi attacks in Yemen have significantly disrupted global trade, posing severe threats to maritime security and the stability of supply chains. These attacks, particularly targeting vessels of companies that engage in trade with Israel, have exacerbated security risks and created economic uncertainty. By targeting key maritime routes and Saudi-led coalition forces, the Houthis have caused increased shipping costs, delays, and broader economic repercussions.

Yemen’s geographical position is strategically pivotal, making it a crucial chokepoint for international trade. The Bab el-Mandeb Strait, located between Yemen and Djibouti, is one of the world’s most critical maritime passages, connecting the Red Sea to the Gulf of Aden and the Arabian Sea. This strait sees approximately 6.2 million barrels of oil transit daily, underscoring its significance to global energy supplies directed towards Europe, the United States, and Asia [1].

The Houthis, also known as Ansarallah, have exploited Yemen’s geopolitical importance by targeting commercial vessels, oil tankers, and military ships. These assaults have not only inflicted immediate physical damage but also fostered a pervasive sense of insecurity among global shipping companies. The increased risk and insurance premiums associated with navigating these waters have been factored into shipping companies’ calculations, driving up the costs of goods worldwide [2].

In response to these heightened risks, some shipping companies have opted to circumvent Africa by taking routes around the Cape of Good Hope instead of traversing the Bab el-Mandeb Strait and the Suez Canal. This alternative routing significantly increases travel distance and time, leading to higher fuel costs and prolonged delivery schedules. As a result, the overall cost of shipping goods has surged, further straining global supply chains and impacting industries that rely on timely deliveries [3].

Beyond the immediate disruptions to shipping, the Houthi attacks have broader economic implications. The disruption of supply chains, especially in industries dependent on timely deliveries of raw materials and finished products, has led to production delays and increased costs. For instance, the automotive and electronics industries, which heavily depend on just-in-time inventory systems, have faced significant setbacks. Reports indicate that global shipping costs increased by 30% in 2023 due to heightened risks in the region [4].

The international community has responded with a mix of condemnation and calls for heightened security measures. The United Nations has repeatedly urged a cessation of hostilities and the protection of commercial shipping lanes [5]. However, securing these extensive maritime areas remains a formidable challenge. Increased international naval patrols and private security measures have been implemented, but these efforts are costly and not foolproof.

The economic impact of these disruptions extends beyond immediate trade concerns. Countries heavily reliant on oil exports, such as Saudi Arabia and the United Arab Emirates, face economic strains as the security of their shipments is compromised. Additionally, the increased cost of global shipping affects emerging economies that depend on affordable access to international markets. The World Bank reported that the Middle East and North Africa (MENA) region could see a 1.2% decrease in GDP growth due to the instability in Yemen [6].

The instability in Yemen is further complicated by the broader geopolitical context, including Iran’s support for the Houthi rebels. This alliance has heightened tensions in the region, contributing to the ongoing conflict and exacerbating security concerns. Iran’s backing of the Houthis is part of its broader strategy to expand its influence in the Middle East. This dynamic has also influenced the conflict in Gaza, as Iranian support extends to groups such as Hamas, further destabilizing the region [7].

Ansarallah has leveraged these attacks to position themselves as the primary power in Yemen. They have issued warnings to governments and shipping companies, suggesting that trading with Israel could render the Bab el-Mandeb Strait unsafe for their vessels. This creates a significant dilemma for international trade, as companies must weigh the risks of disrupted routes against their business interests [8].

Complicating the situation further are the recent agreements between the Houthis and major global players like China and Russia. These agreements provide the Houthis with economic and military support, enhancing their capacity to sustain military operations and political ambitions. In 2024, China signed a strategic cooperation agreement with the Houthis, aiming to secure its maritime interests in the region. Similarly, Russia has increased its diplomatic and military support, viewing the Houthis as a counterbalance to Western influence in the Middle East [9].

In 2024, new data from the Global Trade Monitoring Group indicated that disruptions in the Bab el-Mandeb Strait caused a 15% decline in the timely delivery of goods, affecting markets as far as East Asia and Europe. Additionally, the International Maritime Bureau reported a 20% increase in piracy and armed robbery incidents in the region, exacerbating security concerns for commercial vessels [10].

In conclusion, Yemen’s Houthi attacks have far-reaching consequences for global trade and economic stability. The strategic importance of the Bab el-Mandeb Strait means that any disruption has a ripple effect across global supply chains, increasing costs and delays. While international efforts continue to mitigate these risks, the persistent instability in Yemen, influenced by broader regional conflicts and Iran’s involvement, underscores the urgent need for a comprehensive and lasting resolution to the conflict. After all Ansarallah’s actions and statements leave no margin of doubt that whoever continues to trade with Israel will face consequences.

REFERENCES

[1] “The Bab el-Mandeb Strait: Regional and great power rivalries on the shores of the Red Sea,” Middle East Institute, accessed May 20, 2024, https://www.mei.edu/publications/bab-el-mandeb-strait-regional-and-great-power-rivalries-shores-red-sea.

[2] “Yemen’s Houthis Attack Saudi Oil Tanker in Red Sea,” Reuters, July 25, 2023, https://www.reuters.com/article/us-yemen-security/yemens-houthis-attack-saudi-oil-tanker-in-red-sea-idUSKBN1KE2IF.

[3] “Red Sea attacks increase shipping times and freight rates,” IEA, February 1 2024 https://www.eia.gov/todayinenergy/detail.php?id=61363.

[4] “Saudi Arabia Suspends Oil Exports Through Bab-el-Mandeb Strait After Houthi Attacks,” gCaptain, July 26, 2018, https://gcaptain.com/saudi-arabia-suspends-oil-exports-through-bab-el-mandeb-strait-after-houthi-attacks/.

[5] ” Middle East Instability Still Obstructing Progress towards Peace in Yemen, UN Officials Tell Security Council, Stressing All Parties to Conflict Must Act for Brighter Future,” UN Press, May 14 2024, https://press.un.org/en/2024/sc15693.doc.htm

[6] ” Middle East and North Africa Economic Update,” World Bank, April 2024, https://www.worldbank.org/en/region/mena/publication/middle-east-and-north-africa-economic-update

[7] ” Iran in the Middle East: Introduction,” Middle East Council on Goreign Affairs, April 19 2024, https://mecouncil.org/publication_chapters/iran-in-the-middle-east-introduction/

[8] ” Are Houthi Red Sea attacks hurting Israel and disrupting global trade?,” Al Jazeera, December 2023, https://www.aljazeera.com/news/2023/12/20/are-houthi-red-sea-attacks-hurting-israel-and-disrupting-global-trade.

[9] ” Russia and China Make Deal With Houthi Movement fo,” Ship & Bukner, March 22 2024, https://shipandbunker.com/news/world/179106-russia-and-china-make-deal-with-houthi-movement-for-safe-red-sea-passage-report.

[10] “IMB 2023 Annual IMB Piracy and Armed Robbery Report,” Safety4Sea, January 2024, https://safety4sea.com/wp-content/uploads/2024/01/IMB-2023_Annual_IMB_Piracy_and_Armed_Robbery_Report_2024_01.pdf.

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