Recent Houthi Attacks in the Red Sea Threaten Global Markets

Recently, the U.S army launched a retaliatory attack on Houthi militants to diminish their aggression within Red Sea waterways–and the roots of this problem extend to the Israel-Palestine conflict. With tension rising among the Middle-East countries, Houthi militants—provisionally in control of Yemen—had targeted their attacks to maritime trade along the Red Sea and the Gulf of Aden. 

Despite their claims that they were assailing Israel to demonstrate support for Israel,, the attacked vessels turned out to have no link with supplying Israel. In response, Washington launched airstikes on Yemen, thereby declaring that they would not hesitate to attack the Houthies if they insisted on exhibiting aggression.

The Red Sea functions as the world’s most significant waterway; It is a main passage that ties the Arabian countries with the Mediterranean countries. Recent attacks have forced a majority of shipping companies to take a detour to avoid the aggressions of Houthis. The rerouted vessels now started to travel around the Southern tip of Africa, extending the trip by 30%. As the long journey requires more fuel, the oil demand has also surged by 3%, with further increase predicted. This incidence of strong demand signifies a further inflation of oil prices. In the face of such prolonged aggression, analysts predict that the increase in energy prices cannot be overlooked. 

Furthermore, the Red Sea is a threshold to the Suez Canal for multitudes of ships that port crude oil. In this sense, the interference of global trade in the Red Sea area will directly hit the Suez Canal, contributing up to the inflation of oil price. 

Oil is not the only commodity hit by the Houthi attacks; East Asian exports are also experiencing a heavy price increase. It is becoming clear that the insistence of crises within significant trade zones affect supply and demand dynamics to cause a ‘domino effect’ that can  disrupt  trade patterns and threaten the global market.