A growing number of companies, including London-based oil and natural gas firm BP, have halted their shipments through the Red Sea due to mounting attacks on vessels by an Iranian-backed militant group.
The announcement comes after Houthi rebels in Yemen have targeted Israeli-linked commercial vessels amid Israel’s ongoing war with the Hamas terrorist group that controls the Gaza Strip. In the past week, however, the Houthi rebels have escalated their attacks.
In an emailed statement to NTD on Dec. 18, a spokesperson for the British energy giant said that it has decided to temporarily suspend all transits through the Red Sea—one of the most important trade routes in the world for oil tankers.
“In our trading & shipping business, as in all BP businesses, the safety and security of our people and those working on our behalf is BP’s priority,” said BP’s press office leader, David Nicholas. “In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea.”
“We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region,” Mr. Nicholas added.
Meanwhile, Taiwanese shipping giant Evergreen Marine Corp. said on Dec. 18 that it would no longer carry Israeli cargo, and instructed its container ships to suspend navigation through the Red Sea until further notice.
“Given that fierce escalation of war situation in recent days, Evergreen will temporarily suspend Israel import and export service due to rising risk and safety considerations with immediate effect until further notice,” Evergreen said in a statement. The company ranks among the world’s leading international shipping companies.
Evergreen added that vessels on regional services to Red Sea ports will sail to safe waters nearby and wait for further notification, while container ships that are scheduled to pass through the Red Sea will be rerouted around the Cape of Good Hope to continue their voyages to destination ports.
Growing Threat to Global Trade
Several major shipping firms recently announced that they would avoid the route after a series of attacks on container ships and oil tankers in the Red Sea and Suez Canal.
France’s CMA CGM Group, Italian-Swiss shipping giant MSC, Denmark’s A.P. Moller-Maersk, and Germany’s Hapag-Lloyd have all said that they would avoid the area due to safety concerns. About 15 percent of world shipping traffic transits via the Suez Canal, which is the shortest shipping route between Europe and Asia.
On Dec. 16, a day after the Iran-backed Houthis claimed responsibility for missile attacks on two Israel-bound cargo ships, CMA CGM said that it would take “prevention measures to ensure the safety of our vessels and their crews navigating these waters.”
“The CMA CGM Group is deeply concerned about the recent attacks on commercial vessels unfolding in the Red Sea Region,” the shipping firm said in a statement. “We have decided to instruct all CMA CGM containerships in the area that are scheduled to pass through the Red Sea to reach safe areas and pause their journey in safe waters with immediate effect until further notice,” it added.
Speaking in Tel Aviv on Dec. 18, Prime Minister Benjamin Netanyahu said the fight against the “Iranian axis of terror” is now threatening to close the maritime strait of Bab al-Mandeb.
Mr. Netanyahu made the remarks while meeting with U.S. Secretary of Defense Lloyd Austin at the Kirya in Tel Aviv, Israel. Mr. Austin said no individual, group, or state should test America’s resolve, adding the United States’ commitment to Israel is unwavering.
“So in the Red Sea, we’re leading a multinational maritime task force to uphold the bedrock principle of freedom of navigation. Iran’s support for Houthi attacks on commercial vessels must stop,” Mr. Austin said.
Norway and Italy were mulling joining the Western task force, officials from both NATO members said. Denmark’s Defense Minister Troels Lund Paulsen said Copenhagen would “participate” in helping provide security, but without elaborating.
Higher Prices
UK Defense Secretary Grant Shapps, meanwhile, said in a statement on X, formerly known as Twitter, that the Houthis recent attacks on commercial ships represent “a direct threat to international commerce.”
My full statement on the attack: pic.twitter.com/fEK60ywjpB
— Rt Hon Grant Shapps MP (@grantshapps) December 16, 2023
ING analyst Rico Luman said the shipping firms’ diversions would add at least a week of sailing time for container liners. Typically, shipping goods from Shanghai to Rotterdam takes around 27 days via the Suez Canal.
“This will at least lead to delays in late December, with knock-on effects in January and probably February as the next round will also be delayed,” Mr. Luman said.
The disruptions would likely affect the supply of consumer goods ahead of the Chinese New Year in particular, with delays leaving retailers with unsellable stock and ultimately driving up prices for consumers, said Marco Forgione, director general at the Institute of Export and International Trade.
On Dec. 18, oil and natural gas prices rose sharply after BP revealed that it would temporarily suspend all shipments through the Red Sea.
Brent crude futures were up 17 cents, or 0.2 percent, to $76.72 a barrel by 09:10 GMT, while U.S. West Texas Intermediate crude rose 48 cents, or 0.7 percent, to $71.91.
Both crude benchmarks posted small gains last week following seven weeks of decline, after a U.S. Federal Reserve meeting last week raised hopes that interest rate hikes are over and cuts are on their way.
Reuters contributed to this report.
