Could the Red Sea Remain a No Go Route for Years?

Could the Red Sea remain a no go route for years? The answer to that question is no, according to Carole Nakhle, the CEO of consultancy Crystol Energy.

“This is not the first time shipping through the Red Sea gets distorted, nor is the Red Sea the only maritime chokepoint for global trade,” Nakhle told Rigzone.

“The good news for global trade is that there are alternatives, albeit at higher costs and longer voyage. No one knows how the current situation will unfold but one remains hopeful that many players are directly affected and they have a strong interest in resolving the problem sooner rather than later,” Nakhle added.

When Rigzone asked Nakhle what it would mean for the global oil and gas sector if the Red Sea did remain a no go route for years, the Crystol Energy CEO said, “as long as supplies are not lost from global oil and gas trade then the impact on prices will be limited”.

Offering his view, Vikas Dwivedi, a global energy strategist at Macquarie, revealed to Rigzone that he thought it was unlikely that the Red Sea remains a no go route for a prolonged period.

“Shipping routes will go back to normal as soon as the Middle East situation calms down,” Dwivedi told Rigzone.

“That said, it is fair to assume that maritime trade will be the last thing to return to normal,” he added.

“If we are wrong and it takes years, it would eventually decrease the netback profits to Middle East energy producers primarily and any others that rely on those routes,” he continued.

“The extra cost would not be borne by customers because they would have choices to receive supply from other, cheaper global suppliers,” Dwivedi went on to state.

Around 30 percent of the world’s container shipping traffic passes through the Red Sea, according to a note sent to Rigzone last month by BMI, a Fitch Solutions company, which highlighted that this also a “key shipping route for oil and gas tankers, as well as bulk shipping”.

“The attacks by Houthis rebels on ships has prompted shipping firms to re-navigate their vessels, away from the Suez Canal (a major East-West shipping route) around Africa via the Cape of Good Hope, redirecting more than $200 billion worth of trade flows since mid-November 2023,” the note added.

“The re-route is adding time and cost to the shipping of goods, with multiple nations exposed to this disruption in global trade,” the BMI note continued.

In a statement posted on its X page on February 4, U.S. Central Command (Centcom) revealed that, on that day at approximately 5.30am Sanaa time, its forces conducted “a strike in self-defense against a Houthi land attack cruise missile”.

“Beginning at 10.30am, U.S. forces struck four anti-ship cruise missiles, all of which were prepared to launch against ships in the Red Sea,” Centcom said in the statement.

“U.S. forces identified the missiles in Houthi-controlled areas of Yemen and determined they presented an imminent threat to U.S. Navy ships and merchant vessels in the region. These actions will protect freedom of navigation and make international waters safer and more secure for U.S. Navy vessels and merchant vessels,” it added.

In a separate statement posted on X on February 3, Centcom noted that, on February 3 at approximately 11.30pm Sanaa time, its forces, alongside UK Armed Forces and with the support from Australia, Bahrain, Canada, Denmark, the Netherlands, and New Zealand “conducted strikes against 36 Houthi targets at 13 locations in Iranian-backed Houthi terrorist-controlled areas of Yemen”.

“These multilateral coalition strikes focused on targets in Houthi-controlled Yemen used to attack international merchant vessels and U.S. Navy ships in the region,” Centcom said in the statement.

“These Iranian-backed Houthi targets included multiple underground storage facilities, command and control, missile systems, UAV storage and operations sites, radars, and helicopters,” it added.

“These strikes are intended to degrade Houthi capabilities used to continue their reckless and unlawful attacks on U.S. and U.K. ships as well as international commercial shipping in the Red Sea, Bab Al-Mandeb Strait, and the Gulf of Aden,” it continued.

In a statement posted on its X page on February 1, Centcom highlighted several incidents that had occurred in the Red Sea region.

“On February 1, at approximately 5.00am Sanaa time, U.S. Central Command forces engaged and shot down one UAV over the Gulf of Aden. There were no injuries or damage reported,” Centcom said in the statement.

“Later the same day, at approximately 10.30am Sanaa time, U.S. Central Command forces conducted strikes and destroyed an Iranian-backed Houthi explosive uncrewed surface vehicle (USV) in the Red Sea,” it added.

“U.S. forces identified the USV heading toward the international shipping lane and determined it presented an imminent threat to merchant vessels and the U.S. Navy ships in the region. U.S. Forces subsequently struck and destroyed the USV in self-defense resulting in significant secondary explosions. There were no injuries or damage reported,” it continued.

“Then, at approximately 12.45pm Sanaa time, two anti-ship ballistic missile were launched from Houthi-controlled areas in Yemen likely towards the M/V Koi in the Red Sea,” it continued.

In the statement, Centcom noted that the missiles impacted in the water without hitting the ship. There were no injuries and no damage reported to the M/V Koi or coalition ships in the area, Centcom said in the statement.

To contact the author, email andreas.exarheas@rigzone.com