Houthi militants are threatening retaliation following US and UK military strikes in Yemen, leading to major oil tanker operators avoiding the critical Red Sea trade route. This has caused a spike in oil prices, with Brent crude reaching over $80 a barrel for the first time in 2024. The UK Prime Minister, Rishi Sunak, has defended the strikes as a necessary response to over 25 Houthi attacks on shipping, which have endangered lives and increased commodity prices.
The International Association of Independent Tanker Owners (Intertanko) has advised members to steer clear of the Bab al-Mandab strait, a key maritime chokepoint, as Houthi leader Abdul-Malik Badr al-Din al-Houthi threatens more significant attacks. This caution has led to some of the world’s largest tanker operators rerouting their vessels, potentially adding time and cost to shipments from the Middle East to Europe.
Before the strikes, oil shippers were more willing to navigate past Yemen, but now Intertanko suggests the threat to shipping could persist for days or longer. The UK’s Maritime Trade Operations office has reported an attempted attack and suspicious small boat activities, indicating heightened risks in the region.
The conflict, which is an extension of the Israel-Hamas war, risks escalating further and disrupting supply chains. Analysts suggest that oil prices could rise by about 15% if the conflict widens, particularly if tensions between Israel and Iran’s proxy Hizbollah in Lebanon increase.
The disruption has already impacted European industry, with Tesla halting its German electric car plant due to delays in parts delivery, and some manufacturers turning to air freight. Container shipping costs have surged, though not as dramatically as during the pandemic, and remain a concern for global inflation pressures.
Brent rises following US-UK strikes in Yemen and advisory warning to vessels
Source: Oil tops $80 a barrel after Houthi threat diverts tankers from Red Sea