Earlier Wednesday, in a report from Reuters, many business chiefs issued a warning that the continued attacks from the Iranian-backed Houthi rebels could result in a significant downturn with the potential to cause months of supply chain congestion.
INTERNATIONAL WATERS RED SEA, YEMEN - NOVEMBER 20: This handout screen grab captured from a video shows Yemen's Houthi fighters' takeover of the Galaxy Leader Cargo in the Red Sea coast off Hudaydah, on November 20, 2023 in the Red Sea, Yemen. On Monday, the Houthi movement in Yemen released footage and photos of the Houthi-run coastguard taking over the Israeli-linked Galaxy Leader Vessel in the Red Sea, which had 52 people onboard. Galaxy Leader is owned by Galaxy Maritime Ltd in the Isle of Man and is linked to Israeli businessman Abraham Ungar through Ray Car Carriers.
This outcome may also result in a shortage of tankers necessary for fuel transportation.
The Cause
These attacks have been occurring since November of last year, slowing down trade between Europe and Asia and alerting other nations. The Houthi rebels have gone on record saying that their attacks are in solidarity as a result of the conflict between Israel and Palestine. The group has also stated that if the United States and Britain continue to strike their sites within Yemen they will expand their targets to US ships as well. Iran also provided a statement "The security of the Red Sea is tied to the developments in Gaza, and everyone will suffer if Israel's crimes in Gaza do not stop ... All the (resistance) fronts will remain active". This comes from Iranian Foreign Minister, Hossein Amirabdollahian.
Reuters also revealed that India has been holding diplomatic talks with Iran and has been utilizing its own means to protect its exporters according to a government official. Although there haven't been many details regarding how those diplomatic talks have gone or what means India has taken to protect their exporters.
As for the businesses themselves, many have decided to take a longer route around Africa or simply come to a halt entirely. All to remain clear of the Red Sea. For context, the Red Sea accounts for 15% of the shipping traffic around the globe. One of the affected businesses, Maersk, stated "It's one of the most important arteries of global trade and global supply chains and it's clogged up right now". This statement came from the CEO of Maersk, Vincent Clerc. Banking executives have also shared their worries about the effects of this setback, predicting that it could lead to inflationary pressures which could delay or even backpedal reverse interest rate cuts.
The conflict in Gaza is escalating without the need for the physical deployment of soldiers from other territories. However, it remains unclear whether diplomatic talks will provide any concrete results. The US had previously issued sanctions to slow down this conflict to little effect.
