|
Trending Topics
|
Source: https://warontherocks.com/2024/02/red-sea-shocks-and-the-new-more-stable-normal/
Houthi Attacks on Red Sea Shipping Have Limited Impact on Energy Prices
(War on the Rocks) Gregory Brew - Actors can threaten to disrupt energy supplies, but their leverage is limited. Months of Houthi attacks on shipping, followed by a significant U.S. and British military response, has done little to move oil prices, while the impact on supply has been negligible. The Red Sea crisis has disrupted the shipping of goods and increased costs for some companies. When the Houthis began attacking commercial maritime traffic in mid-December, within a month, 3/4 of container traffic was avoiding the Red Sea, opting for the longer, pricier, but safer route around Africa. While Middle East and Russian oil continued to transit the Red Sea, Western firms opted for the Africa route - or, in some cases, chose different markets for their products. By February, tanker traffic through the Bab al-Mandeb had fallen by 50%. Most of the region's energy flows out of the Persian Gulf and through the Strait of Hormuz, an area which has remained outside the regional crisis. The Persian Gulf sends the majority of its supply east, to China and northeast Asia. Middle Eastern energy was of pivotal economic importance to the economic life of the U.S. and Western Europe in the last century, but by the 21st century, its relative importance had declined. Moreover, with the return of the U.S. as an oil and gas exporter, oil is more abundant than ever, thanks in part to booming U.S. production. The U.S. currently supplies 20% of the EU's crude oil, and in 2023 it accounted for half of the EU's liquified natural gas imports.