Attacks on vessels by Iranian-backed Houthi militants in Yemen have disrupted international commerce on the shortest shipping route between Europe and Asia.
The attacks, targeting a route that accounts for about 15% of the world’s shipping traffic, have pushed several shipping companies to reroute their vessels.
In response to the attacks, the U.S. returned the Yemen-based Houthi rebels to a list of terrorist groups, which hits the Iran-aligned group with harsh sanctions.
The CEO of Maersk said on Wednesday that the disruption to global shipping caused by the attacks on vessels in the Red Sea will probably last at least a few months.
Some shippers of liquefied natural gas (LNG), including the world’s second largest LNG exporter QatarEnergy, have stopped sending tankers via the Red Sea region.
However, as my colleague Clyde Russell notes, LNG prices are unlikely to shift much as other factors continue to drive the market.
Coffee traders have also been impacted by the shipping disruptions, with higher container freight rates causing costs to soar for European roasters.
The extensive rerouting around Africa is also altering fueling patterns and boosting demand for bunker fuel at far-flung ports, as Jeslyn Lerh, Wendell Roelf and Robert Harvey report here.
Beyond market impacts, the extensive redirecting of vessels onto longer routes to avert potential disruption is causing shipping sector emissions to climb, especially among container fleets.
