The U.S. Navy destroyer USS Carney sets sail in the Bosphorus in Istanbul, Turkey, July 14, 2019.
Yoruk Isik/Reuters, FILE
On Tuesday, the United States initiated a multinational operation to secure commerce in the Red Sea due to attacks by Iran-backed Yemeni militants, causing disruptions to global trade. The Houthi militant group, responding to Israel’s actions in Gaza, targeted international vessels in the Red Sea, leading to shipping companies rerouting and concerns about sustained trade disruptions. The crisis escalated as major shipping firms, including BP and Maersk, altered routes, impacting the vital trade route linking Europe, North America, and Asia via the Suez Canal.
The U.S.-led initiative, named “Operation Prosperity Guardian,” involves a task force comprising nations such as Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles, and Spain. The task force aims to conduct joint patrols in the southern Red Sea and the Gulf of Aden to address the international challenge posed by Houthi actions. However, it remains uncertain how many countries are willing to take actions like intercepting Houthi missiles and drones.
The Houthi group claims to target only Israeli ships or those heading to Israeli ports, denying threats to other countries. In response, the U.S. Secretary of Defense, Lloyd Austin, condemned the Houthi actions and called for collective international action.
The impact on global trade is evident, with companies like BP and Maersk rerouting shipments, causing delays and increased costs. The crisis has expanded beyond the Israel-Hamas conflict to involve the United States and its allies against Iran and its regional proxies. The situation adds complexity to Middle East dynamics and raises concerns about the broader financial impact on global trade, including potential inflationary pressures.
Iran denies involvement in the Houthi attacks, attributing them to its allies. The U.S. accuses Iran of being behind the attacks, contributing to the heightened tensions in the region. The European diplomat participating in the task force emphasizes sending a strong signal to Iran and its proxies, stating that the Houthis act on behalf of Iran.
The overall impact on global trade will depend on the duration of the crisis, with immediate burdens such as increased insurance premiums and longer routes. The redirection of shipping routes, particularly around Africa’s southern tip, incurs additional costs, with estimates suggesting up to $1 million extra in fuel for each round trip between Asia and Northern Europe.
As the situation unfolds, shipping companies are developing contingency plans, and the international community closely watches the developments in the Red Sea. The crisis underscores the complex geopolitical dynamics in the Middle East and their repercussions on global economic and trade stability.
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