The Red Sea crisis is keeping everyone on their toes as it continues to ratchet up to new levels, threatening to disrupt supplies and raise the costs of consumer goods. Shell is the latest firm in a long line of companies, which decided to steer clear of the Red Sea shipping route in response to rising Houthi vessel attacks. Media reports indicate that the UK-headquartered energy giant has hit the breaks on any shipments going through this shipping lane indefinitely.
With maritime trade in peril in the Red Sea region due to safety risks, many shipping players are suspending their transits even though this is perceived to be one of the most heavily traveled waterways in the world. According to the Wall Street Journal (WSJ), Shell has become the most recent company, which decided to halt all Red Sea shipments indefinitely in the face of the dangers that lie in wait, as the Houthis keep their barrage of attacks on vessels passing through the Red Sea, spurring fears about the possibility of a wider conflict breaking out across the Middle East.
The WSJ’s report indicates that the UK oil major made the move to suspend its Red Sea transits after one of its chartered tankers, which was carrying Indian jet fuel, caught the Houthis’ attention last month, becoming another notch on the growing list of vessels attacked by the group via a drone and harassed by small boats. Shell manages a fleet of 28 vessels that deliver energy around the world, including about 20 LNG carriers.
The Houthis, which are allegedly doing Iran’s bidding, control Yemen and have managed to wreak havoc on the Red Sea trade, forcing many international maritime players to divert their ships around the Cape of Good Hope on the southern tip of Africa. The security woes in the Red Sea have led to a drop in tanker transits, as these vessels are now diverting from these trade lanes alongside container ships, upping the shipping costs ante.
Many fear that a further disruption to maritime trade activities along with elevated oil prices could undermine the efforts to combat inflation, which has become a household name due to the COVID-19 pandemic and the energy crisis. Shell’s decision to avoid the Red Sea comes after BP made a similar move last month, followed by Qatar Energy, which did the same this week.
Moreover, the list of shipping industry giants that took steps to suspend trading on their Red Sea trade routes includes but is not limited to Denmark’s A.P Moller-Maersk, the Italian-Swiss Mediterranean Shipping Company (MSC), France’s CMA CGM, Germany’s Hapag-Lloyd, and Hong Kong’s Orient Overseas Container Line (OOCL). Aside from these, Sweden’s Stena Bulk, Singapore’s Hafnia, and Denmark’s Torm also seem to have made up their minds to avoid the Red Sea.
The Houthis’ so-called maritime retaliation tactics against global shipping companies with ties to Israel, which are affecting vessels heading to and from the Suez Canal with no such ties as well, are happening against the backdrop of the Israel-Gaza crisis, which shows no signs of stopping despite the death toll reaching around 24,000. According to Al Jazeera, Qatari Prime Minister, Sheikh Mohammed bin Abdulrahman Al Thani, described the situation in the Middle East as a “recipe for escalation everywhere,” during his speech at the Davos summit.
The plot continues to thicken further across the Middle East, as the number of attacks against merchant ships in the Southern Red Sea and Gulf of Aden grows in proportion, despite multiple warnings and a UN Security Council Resolution. After a coalition consisting of the U.S., the UK, Bahrain, Australia, Canada, and the Netherlands recently targeted multiple Houthi sites in Yemen, oil prices surpassed $80 a barrel for the first time in 2024 on January 12, but ended at $78.29 a barrel while the U.S. West Texas Intermediate crude futures settled at $72.68.
The rising tensions in the Middle East have been supporting oil prices, however, Brent crude futures dropped by 1.6% to $77.03 per barrel on Wednesday, January 17, while the U.S. West Texas Intermediate (WTI) crude futures fell by 1.9%, settling at $71.05. Despite the longer shipping routes and higher costs, oil supplies have not been endangered so far, keeping the Red Sea crisis’ impact on oil markets to a minimum for the most part.
Furthermore, the U.S. Central Command (CENTCOM) claims that the Houthis launched an anti-ship ballistic missile into international shipping lanes in the Southern Red Sea on January 16, striking M/V Zografia, a Maltese flagged bulk carrier, which reported no injuries. The vessel’s personnel informed the ship was seaworthy and continued its Red Sea transit. This attack is believed to be a retaliation for the airstrikes carried out by U.S. Forces, which struck and destroyed four Houthi anti-ship ballistic missiles prepared to launch from Yemen.
On the previous day, the Houthis fired an anti-ship ballistic missile from Yemen and struck the M/V Gibraltar Eagle, a Marshall Islands-flagged, U.S.-owned and operated container ship, which reported no injuries or significant damage and continued its journey. Earlier in the day, the U.S. Forces revealed the detection of an anti-ship ballistic missile fired toward the Southern Red Sea commercial shipping lanes, which failed in flight and impacted on land in Yemen with no injuries or damage reported.
This occurred after the U.S. CENTCOM Navy forces carried out “a night-time seizure of a dhow conducting illegal transport of advanced lethal aid from Iran to resupply Houthi forces in Yemen as part of the Houthis’ ongoing campaign of attacks against international merchant shipping,” while undertaking a flag verification on January 11. The boarding of the dhow was executed by U.S. Navy SEALs operating from USS Lewis B Puller (ESB 3) and supported by helicopters and unmanned aerial vehicles (UAVs), near the coast of Somalia in international waters of the Arabian Sea.
The U.S. Central Command emphasizes that this mission enabled the seizing of Iranian-made ballistic missile and cruise missile components, including propulsion, guidance, and warheads for Houthi medium-range ballistic missiles (MRBMs) and anti-ship cruise missiles (ASCMs), as well as air defense-associated components. Based on the U.S. CENTCOM’s initial analysis, these same weapons have been employed by the Houthis to “threaten and attack innocent mariners on international merchant ships transiting in the Red Sea.”
General Michael Erik Kurilla, USCENTCOM Commander, elaborated: “The dhow was deemed unsafe and sunk by U.S. Navy forces. Disposition of the 14 dhow crewmembers is being determined in accordance with international law. It is clear that Iran continues shipment of advanced lethal aid to the Houthis. This is yet another example of how Iran actively sows instability throughout the region in direct violation of U.N Security Resolution 2216 and International law. We will continue to work with regional and international partners to expose and interdict these efforts, and ultimately to reestablish freedom of navigation.”
Avi Melamed, Former Israeli Intelligence Official and regional analyst, underscored: “The unfolding scenario in the Red Sea reflects the inevitable convergence of Tehran’s hegemonic goals and the West’s commitment to global order. The results of the ongoing clashes won’t only shape the regional landscape, but the global one. Tehran’s quest for regional domination is not about what’s going on in Gaza but rather to shape the trajectory of the international system.
“Following last week’s counterstrikes by the United States & United Kingdom, the recent and ongoing Houthi launched strikes on Red Sea shipping signal that Iran has not been deterred yet and likely does not believe the U.S. is willing to directly or with significant force respond to the harassment it is directing through its proxies, and most recently through its own direct action. While initiated by events in Israel and Gaza, this power struggle extends beyond the region, defining both regional and global dynamics.”
The deployment of Operation Prosperity Guardian (OPG), a multi-national security initiative established to respond to Houthi-led attacks on shipping in the Red Sea, was expected to help tackle these attacks and bolster safety. However, nothing has been settled yet. With the attacks on vessels reaching new highs as the Israel-Gaza crisis inflames sentiments and pushes previously simmering tensions to boiling points, analysts are worried about a potential escalation across the Middle East, which would disrupt supplies of goods, hitting the global economy hard just as nations around the globe are trying to come to grips with inflation.
The security and safety in the Middle East is hanging on a thread since geopolitical tensions and the recent events in Gaza and the Red Sea have brought the region within a hair’s breadth of a much wider conflict. Therefore, the right time to act and de-escalate the situation is now.
If more time is lost before a two-state solution for the Israel-Gaza crisis is implemented, more innocent people will pay the price of inaction.