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The US military carried out more strikes against the Houthis on Thursday, targeting two anti-ship missile sites, Reuters reports. The missiles were reportedly being prepped for firing and were judged to be “an imminent threat” to shipping and US Navy vessels in the area, the newswire writes, citing comments made by the US military.
The latest attack came on the heels of another round of American strikes earlier on Wednesday night targeting 14 missile sites, Bloomberg reported on Thursday, citing the US Central Command (Centcom). The strikes were reported near Hodeida and Saada, the newswire cited Yemeni media as saying. Wednesday’s strikes were preceded by a drone attack against a US-owned bulk carrier, dubbed the Genco Picardy, which resulted in material damage but no injuries to crewmen, Centcom also said.
Yemen’s Houthis launched two anti-ship ballistic missiles at a US-owned chemical tanker on Thursday night, causing no damage or injuries, Reuters reported on Friday, citing the US military. The Houthis claimed responsibility for the attack against the vessel, dubbed Chem Ranger, claiming “direct hits,” the newswire added.
Safety granted to some:Russian, Chinese, and vessels from “all other countries” besides the US, UK, and Israel are safe to transit the Red Sea, Houthi senior political adviser and spokesman Mohammed Al-Bukhaiti told Russian outlet Izvesti in a Friday interview. Israeli vessels and those with links to Israel will continue to be singled out and targeted, Bukhaiti affirmed.
The US slaps the Houthis with an X: The US has re-designated the Houthis as a terrorist group in the wake of the Iranian-backed militia’s latest attack against a US-owned vessel which coincided with Wednesday’s US-led strikes, Reuters reported on Thursday. The move is intended to cut off funding and weapons the group could use to support its attacks against shipping, the newswire said. Joe Biden also vowed to continue airstrikes while recognizing that they have not yet deterred the Houthis, Reuters reported separately on Friday. “Are they stopping the Houthis? No. Are they gonna continue? Yes,” the newswire cited Biden as telling reporters aboard Air Force One.
Italy wants a decision on an EU naval mission for the Red Sea by today in a bid to launch operations as early as possible, Reuters reported last week, citing statements by the country’s foreign minister. The EU’s Political and Security Committee bloc gave its initial backing for the move earlier last week. Italy, Germany, and France are expected to contribute to the force which will coordinate with the existing US-led naval coalition, the newswire added. Red Sea disruptions are contributing to Italy’s economic woes, stifling exports and worsening an already flagging outlook for businesses and industries, Bloomberg reported on Friday, citing a report by Italian business association Confindustria.
Increased attacks have led to a surge in the number of grain carriers rerouting away from the Red Sea and Suez Canal, Reuters reported on Thursday, citing analysts and traders as saying on Friday. Recent attacks included the targeting of two dry bulk carriers — US-owned Gibraltar Eagle and Greek-owned Zografia. Out of the 7 mn tons of grain cargoes a month transiting the Suez Canal, 3 mn tons were rerouted, with the number diverting this week increasing from 20% to 45%, the newswire cited a Kpler analyst as saying. The disruptions could threaten global food security as lengthy transit times for foods risk spoiling and decreased quality, making them “unsellable,” Bloomberg reported on Friday.
Egypt is feeling the ramifications:Egypt has lost about USD 150 mn in Suez Canal revenue due to ongoing Red Sea disruptions, Bloomberg’s chief emerging markets economist Ziad Daoud said on X. Daoud added that the amount is small in relation to Egypt’s annual GDP of USD 400 bn+, but cautioned that the costs will continue to pile up and come amid a currency crisis in the country. Trade volumes through the Suez Canal fell almost 44% y-o-y during the week ending 19 January to a seven-day moving average of 2.8 mn tons, according to data from the IMF’s PortWatch.
There is already an evident spike in air freight cargo bound for Europe, CNBC reported on Thursday, citing ocean and air freight platform Xeneta. Air cargo volumes from Vietnam — an apparel manufacturing hub — to Europe have jumped 62% for the week ending 14 January, with volumes for the week noting a 16% y-o-y increase, the outlet wrote citing Xeneta data. Flights are on average 93% full in terms of cargo and it is likely that air freight rates will jump by as much as 10% if demand continues to spike, Xeneta data showed. “This is all a result of companies trying to mitigate the ocean transit delays,” chief air freight officer for Xeneta Niall van de Wouw said.
Red Sea disruptions have exposed the vulnerability of China’s export-oriented economy to supply chain shocks, Reuters reported on Friday. US companies are increasingly relying on factories in Turkey and Vietnam to fill supply gaps, with the risk that more will join the move as Western countries attempt to reduce reliance on Chinese suppliers, the newswire said. Chinese exporters are also contending with a surge in shipping costs and ins. premiums due to the disruptions, eating away at their profit margins, the newswire cited a Chinese exporter as saying. Chinese Premier Li Qiang stressed the need to ensure supply chains remain “stable and smooth” in a speech at Davos, without making specific references to Houthi-led attacks against shipping in the Red Sea.
Oil markets can endure short-term disruptions but there could be tanker shortages if the situation persists,CEO of Saudi oil giant Aramco Amin Nasser told Reuters at Davos. Demand growth and tighter stocks — after consumers used up 400 mn barrels of reserves in the past two years — are expected to further tighten markets, Nasser added, but spare capacity in OPEC could fill shortfalls in the market.
MARKET REAX–
Rerouting is changing refueling patterns and boosting demand for bunker fuel at African and Mediterranean ports, Reuters reported on Thursday citing traders. Hundreds of vessels have opted to sail around the southern tip of Africa, adding some 10 to 14 days to their journeys and boosting demand for bunker fuels at ports in Mauritius, Gibraltar, the Canary Islands, and South Africa. Low-sulfur bunker fuel prices at Cape Town have surged 15% to next to USD 800 per metric ton since attacks started mid-November, the newswire wrote, citing data from a supplier. While container ships were the first to divert, oil tankers and dry bulk carriers soon followed. The sudden influx of vessels is also straining port infrastructure in Africa, another supplier told the newswire.
Singapore and Rotterdam — among the largest bunkering hubs globally — may also see more customers due to competitively priced fuel, Reuters said. Although Rotterdam and Singapore have yet to see an uptick in demand, that is expected to change over the next few weeks as vessels opt to fill up their tanks on competitively priced fuels to hedge against uncertainties due to reroutes, the newswire noted, citing traders and analysts.
Iraqi oil exports have reportedly not been affected by disruptions, Reuters reported on Thursday, citing statements made by Iraqi Oil Minister Hayan Abdel-Ghani on the sidelines of the World Economic Forum in Davos. Iraq exports some 90% of its oil to Asia, and thus has no need to go through the Red Sea, Abdel Ghani said.
Tracking data says otherwise: Some 6 mn barrels of Iraqi crude loaded at Basra and another 3 mn barrels of Saudi crude and refined products loaded at ports on the Persian Gulf have diverted away from the Red Sea, with most rerouting immediately following the first round of US-led strikes against the Houthis on 12 January, Bloomberg reported on Friday, citing ship tracking data. The large volumes of rerouted Iraqi shipments tracked by the outlet seems to contradict the Iraqi oil minister’s statements at Davos.
OTHER DISRUPTION STORIES WORTH NOTING-
- CMA CGM switches routes for its NEMO service: The French shipping giant has rolled out route changes for its NEMO service connecting Europe, with the Indian Ocean and Australia. Vessels operating the route will no longer transit the Suez Canal, and will instead reroute via the Cape of Good Hope, both ways. (Statement)
- Winter weather + rerouting of vessels is causing congestion: The rerouting of vessels away from the Red Sea, compounded by winter storm-related disruptions, is expected to last several months. Companies including Maersk will offer customers the option to transfer cargo to air freight at ports in the UAE and Oman and fly their cargoes to Europe or the US. (Reuters)
- More diversions = more container emissions: Container shipments of finished and semi-finished goods from manufacturing hubs in Asia to European markets are facing longer journey times due to rerouting, leading to an increase in vessel emissions. (Reuters)
