This article aims to provide an overall view on the Red Sea crisis which is vital for global trade. So, what are the issues in the Red Sea, its vulnerabilities and why is it important to the global economy?
On Thursday, 11th of January, the USA and UK conducted a series of Airstrikes on Houthi rebels. This was in response to the attacks in the Red Sea on trade ships. India has also deployed 12 warships, MQ9B UAVs and Boeing P8I planes to augment security of its trade through the Red Sea.
Geographical Positioning of Red Sea
To know the significance of this region, we have to understand its geographical location. The Red Sea is a seawater inlet of the Indian Ocean, lying between Africa and the Arabian Peninsula. It is a major waterway for international shipping. The Red Sea has a surface area of roughly 438,000 km and is about 2,250 km long with a maximum width of 355 km. Overall, it can be said that it joins the Mediterranean Sea to the Indian Ocean making it a hotspot for intercontinental trade. It borders:-
- West – Egypt as the Red Sea splits into two parts at its northern end with the Gulf of Suez to the northwest and the Gulf of Aqaba to the west. The Gulf of Aqaba is bordered by Egypt along with Israel, Jordan and Saudi Arabia whereas the Gulf of Suez extends to the Mediterranean Sea via the Suez Canal.
- East – Saudi Arabia along the majority of the Red Sea coastline.
- South – Sudan, as the Red Sea extends down towards the Bab el Mandeb strait, which connects it to the Gulf of Aden and the Indian Ocean.
What is a Chokepoint?
According to Wei Liang, a professor of international trade and economic diplomacy at the Middlebury Institute of International Studies at Monterey, a chokepoint has three defining characteristics.
- A strategically important location.
- One or more than one small country controlling it.
- A large number of countries depend on it.
And Suez Canal and the Bab-El-Mandeb Strait, which are the chokepoints of the Red Sea rightfully fit the description. Through the Red Sea an estimated 12% of total world trade is covered annually. It handles 30% of total global container traffic, where each day roughly 500 vessels pass through the region. As much as 8.2 million barrels per day (bpd) of crude oil and oil products traversed the Red Sea over January-November, according to analytics firm Vortexa. According to S&P Global Commodity Insights, in 2023, a total of 16.2 million metric tons or 51% of LNG commerce passed through the Suez Canal from the Atlantic Basin east, while 15.7 million metric tons passed through from the Pacific Basin west. It is also one of the most important worldwide oil transport routes. This route’s northbound traffic is dominated by European imports, particularly crude oil from Middle Eastern exporters and middle distillates from India and the Middle East. Southbound traffic consists primarily of crude flows from Russia to Asian clients as well as processed goods naphtha and fuel oil. Qatar, the United States and Russia are the most active Suez LNG shippers.
The Bab-El-Mandeb
Bab-el-Mandeb, forms the southern entrance to the Red Sea connecting it with the Gulf of Aden and the Indian Ocean beyond. It has Yemen on the northeastern coastline. The Bab-el-Mandeb strait is approximately 20 miles (32 Kilometres) wide at its narrowest point. The Houthis hold a significant stretch of the Yemeni coastline along the Red Sea, providing them with launchpads for attacks and making it difficult for larger vessels to manoeuvre safely in narrow waters. Attacks on merchant vessels in the Red sea is not a new norm and such instances have occurred in the past.
- 2010 – Somali pirates conduct numerous attacks on shipping in the Red Sea and Indian Ocean, disrupting maritime trade and prompting international intervention.
- 2016 – Two Egyptian naval patrol boats were attacked by a rocket-propelled grenade (RPG) in the Red Sea, killing four Egyptian sailors. The attackers were suspected to be militants linked to the Muslim Brotherhood.
- 2017 – An oil tanker and a container ship was targeted by rockets in the Red Sea near the Yemeni port of Hodeidah. The Houthis were suspected to be behind the attacks.
Red Sea Crisis Present Scenario
The Red Sea has recently seen a rise in tensions due to attacks by the Houthi rebels from Yemen. The Houthis are a Shiite Muslim sect based in Yemen. The members of this group are predominantly Sunni Muslims, who are a minority in the country. In 2014, in an armed conflict against the Western and Saudi-backed governments of that time, they occupied the capital city of Shanna along with several crucial ports in Al Hudaydah, which is the coastline of the Bab-El-Mandeb strait. The Iran-backed Houthi has constantly shown support to Hamas. They have conducted multiple missile strikes, most of which were intercepted by IDF (Israeli Defence Forces), since the start of the war. Operating mainly from the Yemeni coastline they utilise a range of unconventional tactics including drones, small explosive-laden boats and even ballistic missiles to target commercial vessels transiting the waterway. Chronology of events is: –
- November 2023 – The Houthi rebels, a Yemeni group backed by Iran began attacking commercial vessels in the Red Sea citing retaliation for Israel’s actions in Gaza.
- December 2023 – Several attacks on ships occurred including one on a Saudi Arabian oil tanker and another on a Liberian-flagged vessel.
- January 4, 2024 – The Houthis targeted an Emirati-flagged oil tanker, causing minor damage.
- January 11, 2024 – The US and UK launch airstrikes against Houthi targets in Yemen, aiming to disrupt their ability to launch attacks on ships transiting the Red Sea.
- January 16, 2024- The US military strikes four anti-ship ballistic missiles in Houthi-controlled territory. A Houthi attacked a Greek-owned bulk carrier, the Zografia, causing minor damage.
Severe outcomes
A report by FreightWaves shows that several companies have paused and rerouted their Red Sea transits. Amongst them, Maersk, MSC, Hapag-Lloyd, CMA CGM, Zim, Evergreen, Yang Ming, Costco, OOCL, HMM, ONE, Euronav, Wallenius Wilhelmsen and Equinor are some of the prominent names. The attacks have compelled the shipping companies to avoid the Red Sea and reroute their vessel around Africa through the Cape of Good Hope. This re-routing has tremendous repercussions on fuel and logistic costs. A minimum delay of 12 days is experienced due to this rerouting along with $1 million extra for each round trip. Since the conflict began, the industry has suffered around $80 billion loss and the price of crude has increased by 8% since then. Reports suggest that these will have various adverse effects on the Western markets, especially Europe.
As a result, there has been mobilisation of military forces in the Red Sea. Over 20 warships from various countries are currently engaged in maritime security operations in the Red Sea. India has deployed 12 warships, MQ9B UAVs and Boeing P8I surveillance planes after an attack on one of its vessels. In December alone US Navy patrolled over 100 times the region with its allies including the UK and NATO. On the 11th of January, the UK and USA conducted a joint air strike on the Houthi rebels inside Yemen. On Sunday the 14th USA again did an air strike on the rebels, making the region an active conflict zone day by day.
What are Alternative Options?
These accounts show how vulnerable the global supply chain and trade transit are when it comes to crises at choke points. Detours and alternative routes are not viable for long-term use. Intercontinental Railway corridors and road projects are a form of solution but are under developmental stage in many corners of the world. The India-Middle East-Europe economic corridor is one such project that is trying to revive the old Silk Route and increase connectivity throughout Asia, the Middle East and Europe. Countries must work on infrastructure and projects that serve global interests, so that temporary crises shall not deter the global supply chain.