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The majority of the global merchant fleet is expected to keep away from the Red Sea for the foreseeable future as the security situation in the region worsens.
The Israeli military has carried out extensive strikes overnight along the Gaza Strip after talks to extend the ceasefire failed to reach an agreement. It was the largest wave of strikes to hit Gaza since the ceasefire began on 19 January.
The Houthis from Yemen are expected to head back on to more of a war footing at sea following the Israeli attacks, and the renewed strikes hitting Yemen from the American military.
Houthi leader Abdul Malik al-Houthi has said his militants will target US ships in the Red Sea in the wake of massive American strikes on Yemen over the weekend, which continued on Monday.
Houthi rebels announced today that they conducted another strike against a US aircraft carrier group, marking their third such assault within 48 hours.
63% of vessels targeted by the Houthi lack any clear affiliation to the US, UK or Israel
Earlier this month, the Houthis said they would restart targeting Israeli-linked ships over Israel’s failure to allow humanitarian aid into war-torn Gaza.
Jack Kennedy, head of MENA country risk at S&P Global Market Intelligence, warned: “The resumption of US airstrikes increases the likelihood of further Houthi attacks on US and allied naval assets in the Red Sea and Gulf of Aden, with a severe risk to all vessels in transit due to uncertainties around Houthi targeting selection. Our data shows that 63% of vessels targeted by the Houthi lack any clear affiliation to the US, UK or Israel. While the stated US intent is to restore freedom of navigation, the Houthis’ decentralized missile capabilities and intent to assert regional influence complicate the situation, likely leading to increased threats to shipping and regional stability.”
“The US strikes against Houthi targets over the weekend are likely to raise insurance rates in the region and keep merchant shipping traffic from transiting through the region,” suggested a shipping markets update from analysts at Jefferies, an investment bank.
Moreover, the Trump administration’s determination to link any further Houthi attacks to Iran risks spreading the Red Sea shipping crisis to other important chokepoints.
“Trump has warned that counter-attacks from the Houthis will de facto be seen as attacks performed by Iran and that Iran will be held responsible. For shipping this means an increased risk of escalation which could include the Strait of Hormuz,” commented Lars Jensen, the head of Vespucci Maritime, who has been providing a daily update on the situation in the Red Sea for the past 16 months.
While there have been no attacks by the Houthis from Yemen on merchant shipping this year, shipowners are still giving the Red Sea a wide berth to the consternation of the Suez Canal Authority. Indeed, for shipping’s two largest sectors, the number of ships avoiding the Red Sea has actually increased this year.
According to data from Jefferies, diversions have increased in the tanker and dry cargo segments. Dry bulk diversions are up to 56% of 2023 figures so far this year, up from 45% in 2024; crude tanker diversions have risen to 48% from 35% and product tankers are up to 52% from 45%.
Containership traffic has continued to divert with transits in the region in 2025 down 90% relative to figures in 2023. This is steady with diversions seen in 2024, while LNG and LPG have continued to divert at the same pace as seen in 2024 with 80% and 74% of capacity, respectively, bypassing the region so far this year.
Data from ABG Sundal Collier shows that overall Gulf of Aden arrivals are down 72% from the 2023 average, something that has badly affected the Egyptian economy with revenues at the Suez. Canal Authority plummeting.
There is little sign authorities believe the Red Sea shipping crisis is coming to an end anytime soon.
The European Union announced last month it is extending the mandate of its maritime security operation, EUNAVFOR Aspides, for an additional year, reinforcing efforts to safeguard freedom of navigation in the Red Sea region. The operation will now continue until February 28, 2026, with a budget of over €17m ($17.8m) allocated for its extended period.
As and when the Red Sea does open up for merchant ship traffic will drive profits and losses for many shipping companies this year.
Top management at Maersk laid out last month how the Houthis could dictate the line between black or red ink for the coming year.
Maersk’s EBIT forecast for 2025 ranges from zero to $3bn, depending on whether the Red Sea opens in the middle of the year or the end of the year.
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