Red Sea Threat Exposes Global Trade's Vulnerability
Global supply risks have deepened as Yemen's Houthi rebels take control of strategic ports in the Red Sea. The Hanish Islands at the entrance to the Red Sea are now under their control, creating a 'double bottleneck' for global trade. Shipping through the Strait of Hormuz has been disrupted due to the US-Iran war, and if this new route is also blocked, it could severely impact the global energy supply chain.
The South Korean economy is particularly vulnerable, relying on Saudi Arabia for over one-third of its crude oil imports and on the Middle East for more than 60% of its crude overall. Oil prices have climbed back above $100 a barrel, and a worst-case scenario could see them reaching $150 per barrel.
The impact extends beyond oil, with raw material prices rising across industries. Copper futures have reached a record high on the London Metal Exchange, while industrial metals like aluminum and zinc, precious metals like gold and silver, and even grains are all posting sharp gains.