Houthi attack in the Red Sea, the possible consequences on the economy

According to analysts, attacks on Houthi positions by the United States and Great Britain are pushing the price of oil higher

Attacks by Yemeni Houthi rebels in the Red Sea (LIVE UPDATES) have caused transportation routes to shift, creating a delay in component supply chains. This was also announced today by Tesla which, according to the German news agency Dpa, was forced to suspend much of its production in Grünheide, near Berlin, due to the situation in the Red Sea. The stop will last for approximately two weeks.

The consequences on the markets

According to analysts, the crisis in Yemen and, in particular, the attacks on Houthi positions by the United States and Great Britain are pushing the price of oil higher. The WTI today gains 3.4% to 74.5 dollars a barrel. Brent rose by 3.2% to 80 dollars a barrel, reaching the levels of the end of January.

The consequences on trade

10%/12% of global trade passes through the Strait of Bab al-Mandab, which connects the Red Sea with the Indian Ocean, of which approximately 10% of oil, 8% of liquefied natural gas and 20/30% of container ships”, explains Giuseppe Dentice, Cesi analyst, to Fanpage. “For us Europeans, the transit from Suez and Bab al-Mandab is fundamental for trade between our continent and Asia”, he underlines.

The risks for Made in Italy

The difficulties in navigation in the Red Sea have a particular impact on Made in Italy agri-food exports, with the change of routes, the increase in costs and the delay in shipments. This is underlined by an analysis by Coldiretti. “The lengthening of the maritime routes between East and West, forced to avoid the Suez Canal due to repeated terrorist attacks, have led – underlines Coldiretti – to dizzying increases in the cost of maritime transport which can even double but increase by around two travel times are also weeks.” The destinations involved are Asian ones, to which Italy “has exported over 217 million kilos of fruit, of which over 182 million kilos are apples, with the main destinations being Saudi Arabia (over 66 million kilos of apples), India (over 51 million kilos of apples) and the United Arab Emirates (over 15 million kilos of apples)”, according to Coldiretti calculations on Istat data in 2022. “Concern – continues Coldiretti – also for wine with exports Made in Italy which are worth 112 million euros in China.” The blockade of the Red Sea, concludes the confederation, “therefore puts Made in Italy exports to China at risk, which for the agri-food sector alone are worth over 570 million euros per year, of which over 90% travel by ship” .