The majority of the world’s commercial fleet is expected to stay away from the Red Sea for the foreseeable future as the security situation in the region worsens.
The Israeli army has carried out extensive strikes overnight along the Gaza Strip after talks to extend the ceasefire did not reach an agreement. It was the largest wave of strikes to hit Gaza since the ceasefire began on January 19.
Yemen’s Houthis are expected to return to more than one war base at sea after Israeli attacks, and the renewed strikes hitting Yemen from the US army.
Houthi leader Abdul Malik al-Houthi said his militants will target US ships in the Red Sea in the wake of massive US attacks in Yemen over the weekend, which continued on Monday.
The Houthi rebels announced today that they carried out another strike against a group of US aircraft carriers, marking their third such assault within 48 hours.
63% of the vessels attacked by the Houthis lack a clear affiliation to the United States, the United Kingdom or Israel
Earlier this month, the Houthis said they would restart targeting ships linked to Israelis due to Israel’s failure to allow humanitarian aid into war-devastated 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 the uncertainties surrounding Houthi target selection given the 63% of vessels lacking affiliation to the United States, the United Kingdom or Israel.
“The US strikes on Houthi targets over the weekend are likely to increase insurance rates in the region and prevent transocean commercial shipping traffic from transiting the region,” an update from Jefferies analysts shipping markets suggested, an investment bank.
Furthermore, the Trump Administration’s determination to link any further Houthi attacks with Iran risks spreading the Red Sea shipping crisis to other major choke points.
“Trump warned that Houthi counter-attacks will be seen de facto as attacks carried out by Iran and that Iran will be held responsible for shipping.
While there have been no attacks from Yemen’s Houthis on commercial shipping this year, shipowners are still giving the Red Sea a wide berth to the consternation of the Suez Canal Authority. In fact, for the two largest shipping sectors, the number of vessels avoiding the Red Sea has actually increased this year.
There is an increased risk of escalation that could include the Strait of Hormuz
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 year-to-date, up from 45% in 2024; Crude tanker diversions have increased to 48% from 35% and product tankers are up to 52% from 45%.
Container traffic has continued to divert with transits in the region in 2025 down 90% relative to figures in 2023.
This is stable with the deviations observed in 2024, while LNG and LPG have continued to deviate at the same rate seen in 2024 with 80% and 74% capacity, respectively, avoiding the region so far this year.
Data from ABG Sundal Collier shows that general Gulf of Aden arrivals have fallen by 72% from the 2023 average, something that has severely affected the Egyptian economy with revenues in the Suez. Canal Authority plummeting.
There are small signs that authorities believe the Red Sea shipping crisis is coming to an end in the short term.
The European Union announced last month that 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 €17 million ($17.8 million) allocated for its extended period.
As the Red Sea opens for merchant ship traffic it will generate profits and losses for many shipping companies this year.
Senior management at Maersk presented last month how the Houthis could dictate the line between black ink or red ink for the coming year.
Maersk’s EBIT forecast for 2025 ranges from zero to $3 billion, depending on whether the Red Sea opens mid-year or year-end.
Starting with the Informa group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine, as well as East Asia editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued an independent career and wrote for a variety of titles including taking on the role of Asia editor for Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and the International Herald Tribune.
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