Houthi Attacks in the Red Sea: Shipping Traffic Diverts, Oil Price Falls Sharply

Attacks Since the Expansion of the Iran War

The tensions fed through directly to the international crude oil markets. The day before the latest incidents, the price of a barrel of the North Sea benchmark Brent had temporarily risen to 100 dollars after the Iran war spilled over into the Red Sea. After the ship movements became known, however, the price dropped significantly: Brent fell by 5.58 percent to 91.38 dollars per barrel.

Brent and WTI Fall Sharply

The US grade West Texas Intermediate (WTI) also declined. It fell by 5.46 percent to 84.43 dollars per barrel. Traders explained the price drop, among other things, with the expectation that the latest diplomatic signals from Washington could potentially de-escalate the situation. US President Donald Trump had stated that Washington was currently in talks with Tehran, which was becoming "more serious by the day" in the negotiations.

Developments in the Gulf have immediate consequences for global energy logistics. Ships that can no longer pass through the Red Sea and the Suez Canal must take the detour around the Cape of Good Hope. This extends voyages by several thousand nautical miles, raises freight costs, and increases delivery times. The port of Yanbu on the Saudi west coast, an important loading point for oil exports, is also affected by the rerouting.

Concern About Expansion to the Strait of Hormuz

At the same time, there is growing concern that the conflict could spread to other strategic straits. The Strait of Hormuz, through which a significant share of global oil and gas supplies flow, is considered a particularly vulnerable point. US media had recently reported on possible Iranian threats to the strait. Should Hormuz actually be blocked or even only persistently disrupted, the consequences for the world economy would be far more severe than the current crisis in the Red Sea.

Impact on Shipping Companies and Asian Trade

With the VLCCs leaving the Red Sea, part of Asian oil trade is shifting back to longer routes. Industry observers see the latest movements as an indication that shipping companies continue to assess the risk in the region as too high as long as there is no reliable security situation. Houthi attacks, also on ships that have no discernible connection to the Gaza war, had repeatedly led to temporary route shifts in recent months.

The coming days are considered decisive. Should the negotiations between Washington and Tehran, which Trump described as "more serious by the day," actually yield progress, this could not immediately stop the Houthi attacks, but it would increase the pressure on the actors to contain the violence. As long as the security situation in the Red Sea remains fragile, ongoing disruptions to international shipping and corresponding fluctuations on the oil markets are to be expected.