We have increased our war (maritime) risk ratings for the southern Red Sea and Bab el-Mandeb Strait from medium to high. This follows increasingly unpredictable targeting of commercial vessels by the Houthi rebel movement in Yemen amid the ongoing Israel-Hamas conflict.
- While the Houthis continue to claim they are only targeting Israel-linked vessels, this definition has become increasingly vague, driving a high degree of uncertainty over which vessels may be attacked.
- In the coming days, more operators will likely follow the world’s major container lines and announce that they are temporarily avoiding the waters altogether. Some traffic continues to flow through the Red Sea but faces elevated war risk insurance premiums.
- Shipping diversions through the alternative South Africa route will increase fuel and labour costs, and drive disruption, including through renegotiation of charterparties.
The Houthis previously selected targets based a clear link to Israeli commercial entities – whether through ownership, management or charter – and later to vessels trading at Israeli ports, but otherwise not affiliated to the country. However, several vessels either with no discernible Israeli links – or increasingly tenuous links – have been targeted. Despite Houthi claims of selective targeting, this vague “link” drives a high degree of uncertainty over which vessels may be attacked.
Victoria Mitchell, an analyst in the Control Risks maritime security team explains the change in risk rating: “Seafarers, operators and businesses reliant on goods transported through the strategic Red Sea are facing the consequences of increasingly unpredictable targeting of commercial vessels by the Yemen-based rebel Houthi movement. Both the impact of international naval forces, and the trajectory of the Israel-Hamas conflict – claimed by the Houthis as reason for the attacks - remain unclear. Amid ongoing unpredictability, our Maritime Team has raised our war (maritime) risk rating to HIGH for the southern Red Sea and neighbouring Bab el-Mandeb Strait.”
Many vessels with clearly identifiable links to Israel – such as ownership or charter by major Israeli shipping lines – had already announced diversions following the 19 November hijacking of the Israeli-owned vehicle carrier Galaxy Leader. Since then, targeting has escalated to include vessels with no Israeli commercial links, or with no previous or scheduled Israeli port calls. These have been attacked with missiles or drones launched from Houthi-controlled territory. International naval forces in the region continue to intercept projectiles bound for merchant ships.
Operator impact, diversions
In light of the escalating attack pattern, major containership operators and oil majors have announced a temporary halting of Red Sea transits, in many cases to await clarity on what protection may become available from international naval forces or potential de-escalation that may come from negotiations. Should these companies choose to avoid the route altogether, the only viable alternative is around the Cape of Good Hope (South Africa).
Vessel operators making this decision will face delays, disruption and increased costs – such as for crew and fuel provision – as they avoid the Red Sea. Rescheduling of subsequent calls will also be required, increasing the administrative burden on operators. These delays and costs will be passed on to charterers and consumers.
Vessels deemed to be at the highest risk – Israeli-owned – have either been flatly refused insurance or have faced significantly higher war risk insurance premiums for Red Sea transits. Insurance premiums for non-Israeli linked operators that continue to carry out Red Sea transits may also further increase considering the unpredictable nature of Houthi targeting.