Rising Maritime Threats in the Red Sea
As attacks on vessels in the Red Sea associated with Israel increase, Universal Defence and Security Solutions Director Duncan Potts shares his regional expertise with global news agency Reuters and Canada's CBC News.
Shipping through the Red Sea is facing increased costs due to intensified attacks by Yemen's Houthi rebels on vessels associated with Israel, raising concerns about wider implications for international maritime trade. The recent strike on a Norwegian tanker by the Houthis, in retaliation for Israel's actions in Gaza, has heightened tension in the Middle East.
The strategic Bab al-Mandab Strait, a conduit for around 23,000 vessels annually, presents accessible targets for such attacks.
The insurance market in London now categorises the southern Red Sea as a high-risk area, necessitating additional premiums for ships, with war risk premiums experiencing a notable increase. The industry has seen war risk premiums climb from 0.07% to between 0.1%-0.15% and 0.2% of a ship's value within a week. For a seven-day cover period, this could mean tens of thousands of dollars in added costs, despite potential discounts. Such volatility in the Red Sea is predicted to sustain elevated insurance rates in the near future.
Additionally, daily rates for supertankers have surged from about $40,000 last month to over $60,000, as per shipbroker Braemar's estimates.
In response to the increased risks, some shipping companies are diverting from the Red Sea, opting for the longer route around the Cape of Good Hope, despite the extra time and expense involved.
The Houthis' latest night-time attack demonstrates an expanded operational capacity. Israel's key southern port of Ashdod has acknowledged the direct risk these attacks pose to its maritime commerce.
Discussions are underway about a potential maritime task force to guarantee safe passage in the Red Sea, as per Jake Sullivan, U.S. President Joe Biden's national security adviser.
Kitack Lim, secretary-general of the UN's shipping agency, stressed on the importance of commercial shipping remaining neutral in geopolitical conflicts and called for international cooperation to maintain safe global navigation.
Read Duncan's comments in full: https://www.reuters.com/world/middle-east/red-sea-shipping-costs-rising-after-houthis-target-more-commercial-vessels-2023-12-12/
