Red Sea Tensions Escalate Global Oil Crisis

Fuel prices have reached record highs in recent months due to tensions in the Strait of Hormuz, but a new threat is emerging that could worsen the global oil crisis. The Department of Energy (DOE) has expressed concern about shipping traffic in the Red Sea after Yemeni Houthi rebels launched attacks on ships going to and from Saudi Arabia.

The DOE-Oil Industry Management Bureau director Rino Abad said that while there is no actual damage reported yet, a blockage in the Red Sea could affect the shipment of around 6-7 million barrels of crude oil. The Red Sea is a vital waterway for oil shipping, connecting the Suez Canal and the Bab-el-Mandeb Strait.

According to the International Transport Forum (ITF), around 14% of global maritime trade and 30% of containerized trade travel through the Red Sea. For oil, the ITF estimates that the trade routes connected by the Red Sea account for 12% of the world's seaborne-traded oil and 8% of worldwide liquefied natural gas.

The disruption in the Red Sea is causing additional costs on shipping companies, shippers, and states. Shipping lines are opting to sail around southern Africa to avoid the Red Sea, which consumes more fuel and takes longer. Insurance premiums have also increased due to the Houthi attacks.