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Danish shipping giant Maersk will continue to reroute vessels away from the Red Sea following Houthi attacks over the weekend, Reuters reports, citing company statements. The decision follows a 48-hour hold by the carrier on transits through the Red Sea and Gulf of Aden following a Houthi-led attack that targeted a Maersk vessel over the weekend. The carrier did not specify a timeline for the resumption of journeys in the Red Sea, stating instead that it will “pause all cargo movement through the area while we further assess the constantly evolving situation,” according to company statements cited by the newswire. The decisions may lead to higher shipping costs, driving fears for another round of global inflations, the newswire wrote.
German shipping giant Hapag-Lloyd will also avoid the Red Sea for at least another week, Reuters reports, citing company statements. Hapag-Lloyd will continue monitoring the situation “day-by-day” until it reassesses its decision on 9 January, a spokesperson for the company said.
The Suez Canal has not been seriously affected, Egyptian officials say: Only 76 vessels have been rerouted across the Cape of Good Hope since disruptions started, compared to 2.1k vessels that transited the Suez Canal as usual, Asharq Al Awsat reports, citing statements by the Secretary General of the International Transport and Logistics Division at the Cairo Chamber of Commerce Amr Al-Samadouni.
Meanwhile, Jordan is feeling the strain: Jordan imports 85% to 90% of its foods, with 65% arriving via the kingdom’s only seaport, the Red Sea port of Aqaba, Arab World Press (AWP) reports. Disruptions in the Red Sea have boosted shipping costs and delayed shipments, incurring added uncertainty for importers, importers tell AWP. The Jordanian Chamber of Commerce and Jordan’s Transport Ministry agreed to establish a joint committee to follow up on developments relating to the disruptions.
REMEMBER- Egypt, Jordan, and Iraq inked a cooperation protocol earlier this year for a transit trade scheme dubbed the Arab Trade Line to facilitate transit trade from Jordan, Iraq, and GCC countries via Egypt. The initiative utilizes ferries and trucks to ship Arab goods to Egypt’s Mediterranean ports, from which they can be loaded onto ships bound for European markets. The scheme was set to kick off last week.
IN OTHER NEWS-Iran snubs US and UK calls to rein in the Houthis: Iran has rejected appeals from the US and UK to end their support for Houthi-led attacks, the Guardian reports. Iran has applauded the Houthis, praising their “brave actions” countering “Zionist aggression,” the Guardian reported citing statements by an Iranian official. The Iranian navy also recently dispatched a warship to the region in a show of solidarity, with the Alborz destroyer transiting the Bab El Mandeb strait to enter the Red Sea earlier this week.
ICYMI- The US and the UK are poised to issue a final warning to the Houthis and are drawing upplans for airstrikes against the militia in response to their attacks against shipping. Such a move would represent a major escalation in the crisis.
MARKET REAX-Oil prices dip as economic woes offset rally due to Red Sea turmoil: Oil prices fell in the first trading session of the new year, as concerns about economic growth due to interest rate hikes offset uncertainty due to Red Sea disruptions, Reuters reported. Brent crude declined 0.8% to USD 76.42, while West Texas Intermediate fell 1% to USD 70.93. A spate of attacks on shipping in the Red Sea over the weekend saw both benchmarks rally USD 2 before falling back, the newswire said.
