From the moment Hamas launched its devastating attack against Israel on 7 October, one of the world’s primary concerns has been to prevent the conflict from spreading beyond the immediate vicinity of Gaza.
It was for this reason that, within days of the attacks taking place, the Biden administration responded by dispatching two aircraft carrier battle groups to the region — primarily to deter countries like Iran from seeking to escalate the conflict.
Other Western powers, such as the UK, responded in similar vein, sending warships to the region and reinforcing their military presence.
And while this strategy has so far succeeded in confining most of the fighting to the immediate vicinity of Gaza, the mounting threat to international shipping passing through the Red Sea, which has forced a number of major shipping operators to re-route their operations, suggests that the wider threat of the conflict escalating cannot be discounted.
In the past few days, a number of major international shipping companies have announced they are re-routing their operations in response to the worsening security situation in the Red Sea.
They include Maersk, Hapag Lloyd, and MSC, with seven of the ten biggest shipping companies now having suspended their shipping operations in the Red Sea. They were joined on Monday by the British oil giant BP, which announced it is halting all oil and gas shipments through the Red Sea.
Delays and extra costs
Apart from the deteriorating security situation, the main reason shipping companies have opted to re-route their shipping operations is the sharp increase in insurance premiums that the attacks on shipping in the Red Sea have prompted.
Consequently, many ships are being diverted around the Cape of Good Hope on the southern tip of Africa, adding up to two weeks in journey time.
The delays and extra costs incurred by the need to avoid the Red Sea, moreover, are likely to lead to a sharp increase in the cost of energy prices and goods, as well as cause delays to the delivery of essential goods, such as electronics, in the run-up to Christmas.
Oil and natural gas prices have already risen following the announcement that BP has suspended shipments through the Red Sea, with analysts predicting that costs are likely to rise further if the attacks continue, a development that could hurt global efforts to bring inflation caused by the pandemic under control.