Rising Red Sea tensions rattle global shipping industry, spark concerns of spillover from Gaza conflict

People gather in a rally to support Palestinians amid the Palestinian-Israeli conflict, in Sanaa, Yemen, Oct. 20, 2023. (Photo by Mohammed Mohammed/Xinhua)

* Over the last four weeks, Houthis, a militant group based in Yemen, have attacked or seized commercial ships 12 times and still hold 25 members of the commercial ship Galaxy Leader hostage in Yemen.

* During a televised speech on Wednesday, Houthi leader Abdulmalik al-Houthi said, "If the United States targets us, we will then retaliate by targeting U.S. battleships and interests in the region with our missiles, drones, and military operations."

* Analysts say the rising tensions on the Red Sea could seriously affect global seaborne trade and the world's supply chain.

* The evolving landscape in the Red Sea is stoking anxieties among Middle Eastern nations, who fear the conflict could disrupt vital shipping routes and destabilize the region.

SANAA, Yemen, Dec. 21 (Xinhua) -- Yemen's Houthi rebels are escalating their attacks on "Israel-related" ships in the Red Sea, demanding retribution for Israel's military campaign in Gaza.

This surge in tensions has prompted major shipping and oil companies to suspend transit through the critical maritime trade route, raising concerns about potential global economic repercussions. In response, the United States and several other nations are forming a new coalition to safeguard ships navigating the Red Sea.

However, the heightened military presence in the Red Sea, as analysts have argued, may stoke active hostilities, exacerbating concerns about the Israeli-Palestinian conflict spilling over into the region.

ESCALATING TENSIONS

Over the last four weeks, Houthis, a militant group based in Yemen, have attacked or seized commercial ships 12 times and still hold 25 members of the commercial ship Galaxy Leader hostage in Yemen.

During his latest tour to the Middle East, U.S. Defense Secretary Lloyd Austin declared on Tuesday in Bahrain that the United States is assembling a new multinational coalition to shield vessels navigating the Red Sea.

Austin said that Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles, and Spain will participate in this joint U.S. mission. The collective efforts will involve collaborative patrols in the southern Red Sea and the Gulf of Aden.

In response, the Houthis said on Tuesday that the new U.S.-led military coalition in the Red Sea would not stop their attacks on Israel-bound commercial ships.

"The coalition formed by America is to protect Israel and militarize the sea without any justification," Houthi spokesman Mohammed Abdulsalam was quoted by the Houthi-controlled Saba news agency as saying.

"As America allowed itself to support Israel by forming an alliance, we also have full right to support Palestine," he said in a statement. "And whoever seeks to expand the conflict must bear the consequences of his actions."

During a televised speech on Wednesday, Houthi leader Abdulmalik al-Houthi said, "If the United States targets us, we will then retaliate by targeting U.S. battleships and interests in the region with our missiles, drones, and military operations."

An Israeli Navy missile boat is seen in the area of the Red Sea on Nov. 1, 2023. (Israel Defense Forces/Handout via Xinhua)

DISRUPTED SHIPMENT

Analysts say the rising tensions on the Red Sea could seriously affect global seaborne trade and the world's supply chain.

Salam Al-Asbahi, a retired general of the Yemeni government forces, warns that the Houthi group can disrupt the Suez Canal-Red Sea corridor, which handles about 12 percent of the world's trade by volume.

"They have the capability to cause major disruption," said Al-Asbahi, pointing to the deployment of Houthi military boats along the Yemeni and regional waters, and their control of the strategic Bab al-Mandab Strait at the Red Sea's southern entrance.

The heightened risks are already reverberating across the industry. Marine insurers in London have declared the southern Red Sea a high-risk zone, prompting shipping companies to obtain additional war risk coverage.

Adding to the concerns, four major container shipping companies -- MSC, Maersk, CMA CGM, and Hapag-Lloyd -- have suspended Red Sea sailings since Dec. 15. This, in turn, has driven up freight rates on the Asia-Europe route.

Data from the Shanghai Shipping Exchange shows the market freight rate, including shipping and additional fees, was 1,024 U.S. dollars per twenty-foot equivalent unit (TEU) from Shanghai Port to major European ports on Dec. 15, up by 4.1 percent from the previous week.

However, Egypt, home to the Suez Canal, seeks to downplay the impact. While acknowledging the heightened security concerns, Suez Canal Authority Chairman Osama Rabie insisted on Sunday the disruption remains limited.

He said that only 55 ships have rerouted to the Cape of Good Hope since Nov. 19, compared to the 2,128 that traversed the Suez Canal during the same period.

WIDER CONFLICT

The deployment of a U.S.-led military escort in the Red Sea has heightened concerns about a potential escalation of the Israeli-Palestinian conflict spilling over into the crucial waterway.

"The presence of U.S. warships alongside Israeli interests raises the possibility of unintended encounters with Houthi forces," said Al-Asbahi. He also noted Iran's support for both Houthis and Palestinian groups will potentially complicate the regional dynamics.

The evolving landscape in the Red Sea is stoking anxieties among Middle Eastern nations, who fear the conflict could disrupt vital shipping routes and destabilize the region.

Moreover, both the Yemeni government and regional powers like Saudi Arabia and Egypt, despite their reliance on the Red Sea-Suez Canal route, hesitate to join the U.S. escort mission and directly engage with Houthis.

Al-Asbahi attributed this partly to Houthi rhetoric aligning with Arab public sympathy for Palestinians. "Their strong stance on the Palestinian issue resonates with many in the region, making it politically difficult for some countries to openly oppose them," he explained.

Further complicating the situation is the backlash among Arab countries against the U.S. policy on the ongoing Gaza conflict, making cooperation with the U.S. coalition less appealing.

"Not a single country on the Red Sea agreed to join the U.S. coalition to safeguard the Red Sea. And only one Arab country joined -- Bahrain. What does that tell us about Biden's diplomatic pull?" said Trita Parsi, executive vice president of Quincy Institute for Responsible Statecraft, a U.S.-based think tank.

The Red Sea game now comes to a head, where concerns about maritime security collide with the complexities of the Israeli-Palestinian conflict. It remains to be seen whether the U.S. escort operation can navigate these choppy waters without igniting wider regional tensions.