Prices for all goods in the world will increase. Why are the Houthis and the shelling of ships in the Middle East to blame for this?

The conflict in the Red Sea will lead to a shortage of ships and delays in oil supplies, says Amin Nasser, CEO of the largest fuel exporter, Saudi Aramco.

According to him, this will happen if the crisis associated with the consequences of the Houthi attacks in the Red Sea drags on. Now many carriers are forced to redirect cargo around Africa.

Houthi attacks in the Red Sea began due to Israel's conflict with Hamas

Against the backdrop of the military conflict in the Gaza Strip that began in October, the Yemeni Ansar Allah movement came out in support of the radicals from Hamas. The Houthis announced that they would attack all ships in any way associated with Israel and would not allow them to pass through the waters of the Red Sea and the Bab al-Mandeb Strait.

By mid-December, the consequences of this decision had already begun to have a serious impact on global trade. The Danish shipping company Maersk, which is the largest carrier of goods in the world, announced the suspension of operations in the Red Sea and the shipment of cargo bypassing Africa. The decision was announced against the backdrop of a missile attack on the Maersk Gibraltar container ship using a drone. Shortly after, IKEA warned Europeans of possible shortages in stores as supply chains were disrupted by ongoing attacks in the Red Sea.

In general, representatives of the logistics market estimated the increase in the duration of cargo delivery between Asia and Europe at 14-15 days. The cost of ship insurance has also begun to rise in price.

After coalition strikes against the Houthis, the situation in the Red Sea worsened

In this regard, the US-British coalition, according to US President Joe Biden, gave “an inevitable response to hostile acts against freedom of maritime navigation.” However, the US and British strikes on Yemeni Houthi targets on January 12 did not calm the situation. The number of ships passing through the Bab el-Mandeb Strait has been halved, from 270 to 114 ships, due to fears of retaliatory attacks from rebels.

The response followed, and tensions in the Red Sea region only continued to intensify. The Iranian-backed Houthis attacked a US-owned commercial ship with a ballistic missile, and Iran's Islamic Revolutionary Guard Corps struck the US base at Harir and Erbil International Airport in Iraq on the night of January 16.

According to analysts, the main risk now is consists of is that Iran could be directly drawn into the conflict, although so far, judging by the reaction of the oil market, such a possibility is considered unlikely. However, Reuters estimates that already about 15 commercial vessels have either changed course or stopped altogether before entering the southern Red Sea amid the escalation.

Oil and gas suppliers react to worsening situation in the Red Sea

The need to skirt the Red Sea and the Suez Canal, the fastest route from Asia to Europe through which 12 percent of global shipping passes, has been said to result in about a two-week delay in shipments. Citigroup notes that redirecting tankers to Europe along a longer route indirectly tightens the market situation, leading to the accumulation of oil reserves. At the same time, experts there do not yet expect a sharp rise in oil prices.

European gas prices are still falling due to high reserves, even against the backdrop of Qatar's announcement that it will stop the movement of LNG tankers through the Red Sea, as well as the expected increase in the cost of transporting LNG. British oil company Shell, whose tanker was previously attacked by a drone, also stopped all shipping through the Red Sea indefinitely.

The situation in the Red Sea will also affect Russia

The aggravation of the situation also affected the Russians – the Houthis mistakenly attacked tankers with Russian oil at least twice, according to data from the Ambrey company. So, on January 13, they attacked a tanker sailing under the flag of Panama, but the missile did not reach the ship by about 500 meters and went under water.

Speaking about the impact of the situation on the shipment of goods to Russia, experts note that in recent years the supply route from Asia leading through the Red Sea has not been popular, however, rising prices and reduced availability of tankers may also affect them.

In a conversation with Lenta.ru, the general director of the EuroTransExpedition (ETE) company, Kirill Rassadkin, recalled that the Red Sea leads straight to the Suez Canal, the most important sea passage connecting Asia with Europe and the European part of Russia. Due to Houthi attacks, ships have to go around Africa. “The change in routes immediately affected delivery times, and there was also an increase in the cost of sea freight. On average, the transit period has increased by 20 days, and the delivery period has increased from 50 to 100 days,” the expert stated. According to him, for those who “are not ready to come to terms with the price and increased costs,” alternative routes will be direct rail delivery, or multimodal (carried out by two or more modes of transport) routes through Vladivostok.