Red Sea | Credits: Reuters
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Red Sea chaos: Houthi terror strikes disrupt global shipping, US reacts! 

United States: The United States reinstated the Yemen-based Houthi rebels on a terrorist list on Wednesday, while industry leaders warned that disruptions to Red Sea shipping caused by their attacks might disrupt supply lines for months.

Houthi Attacks Escalate

Attacks on ships in the region by Iran-allied Houthi militias since November have hampered trade between Asia and Europe and concerned foreign powers, escalating Israel’s more than three-month-old conflict with Palestinian Hamas militants in Gaza.

The Houthis claim to be acting in sympathy with Palestinians and have threatened to widen their attacks to include U.S. ships in reaction to American and British bombings on their bases in Yemen.

According to U.S. officials, the “Specially Designated Global Terrorist” (SDGT) designation is intended to cut off money and weapons used by the Houthis to attack or hijack ships.

A Houthi spokesman told Reuters that attacks on ships bound for Israel would continue and that the designation would have no effect on their position.

“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,” Amirabdollahian said at the World Economic Forum in Davos.

Militants of Houthi

Snarling Supply Chains

Maersk (MAERSKb. C.O.) and other major shipping lines have advised hundreds of commercial vessels to avoid the Red Sea, sending them on a longer path across Africa or pausing until vessel safety can be ensured.

“It’s one of the most important arteries of global trade and supply chains, and it’s clogged right now,” Maersk CEO Vincent Clerc told the Reuters Global Markets Forum in Davos, adding that the interruption will most likely last a few months.

Banking executives are concerned that the crisis could produce inflationary pressures, perhaps delaying or reversing interest rate reduction.

According to Drewry’s world container index, freight charges have more than doubled since early December, and insurance sources report that war risk premiums for shipments over the Red Sea are also increasing.

International Shipping Giants Navigate Challenges

The attacks target a corridor that accounts for approximately 15% of global shipping trade and serves as a critical link between Europe and Asia. Sumitomo Corp (8053.T) was the latest company to be caught up, stating that it had shipments in the Red Sea that were affected by the situation.

The attacks are causing significant disruption to Italian ports, raising concerns that a prolonged crisis will force firms to permanently shift cargo away from the Mediterranean.

When compared to transit via the Red Sea to the Suez Canal, taking the alternative shipping route around South Africa’s Cape of Good Hope might add 10-14 days to a journey.

Tanker Shortage

The CEO of Saudi oil giant Aramco warned that if the Houthis continued to assault ships, there would be a shortage of tankers.

“If it’s in the short term, tankers might be available … But if it’s longer term, it might be a problem,” CEO Amin Nasser said in an interview in Davos.

In a sign of the tensions, a Malta-flagged container ship was approached on Wednesday by three boats and a drone 10 miles southwest of Yemen’s Dhubab. No damage or casualties were reported, British maritime security firm Ambrey said in an advisory note.

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