A threat to the global economy: the consequences of the Houthis joining the fighting

The joining of the Houthis in the fighting circle is a direct threat to the shipping lanes in the Red Sea and the Bab al-Mandab strait, which are a major lifeline for the global economy. About 12% of world trade and about 30% of global container traffic pass through this route on their way to the Suez Canal, and the current disruptions are forcing the shipping giants to change their route. The move leads to significant delays in the delivery of goods and causes deep concern among powers and financial institutions around the world.

• The attacks on merchant ships force shipping companies to divert their course around the Cape of Good Hope in Africa.
• Changing the route extends the sailing time by about ten days to two weeks.
• The diversion of ships creates maritime “traffic jams” that affect the availability of goods all over the world.
• The disruption to global supply chains affects one of the busiest shipping lanes.

• Shifting the ships to long routes requires increased fuel consumption and makes the operation of the fleets more expensive.
• Insurance companies sharply increased the premiums for ships passing through the risk zone.
• Some insurance companies completely avoid insuring vessels in the threatened area.
• The excess costs are passed on to the end consumer and contribute to the increase in global inflation.

• The Red Sea region serves as a critical axis for the transfer of oil and natural gas (LNG) from the Persian Gulf to Europe and America.
• Any security escalation immediately jumps the barrel prices in the international markets.
• The increase in energy prices may lead to higher production and transportation costs in all economic sectors.
• There is a fear of slowing down economic growth and pushing vulnerable economies into a recession.

• Entering the campaign allows Tehran to carry out threats to use strategic weapons against the United States and the countries of the region.
• The Iranians clarified this week that if the United States carries out a ground operation against Kharg Island or the Strait of Hormuz, the Houthis will close the Strait of Bab al-Mandab.
• However, commentators in Yemen claim that this is only a symbolic intervention.
• According to these assessments, the Houthis are only acting to reduce the anger of Iran, which expected their earlier involvement.