The Red Sea, one of the most saline waters in the world, is a major shipping route in the global economy with many countries having a keen interest. An inlet of the Indian Ocean located between Africa and Asia, it serves as a major channel for transportation of many commodities and fighting at its narrow mouth could threaten oil supplies from the Persian Gulf to much of the industrialised world.

The Red Sea is surrounded by six countries—Egypt, Sudan, Eritrea, Djibouti and Ethiopia (ongoing negotiations) on one side, and Yemen and Saudi Arabia on the other. For decades, the Arab states have dominated the inlet and used it as a tool to pressurise Israel. The Houthis have control over a major part of the Red Sea coastline, along with Sana’a and the north of Yemen.

Recently, the Houthis have stepped up their attacks on any cargo passing through the Red Sea since mid-November in response to Israel’s bombardment of Gaza. This has forced ship owners to consider alternate options.

Why is Red Sea important?

The Red Sea is one of the busiest shipping routes in the world. At its northern end is the Suez Canal, which handles about 12 per cent of global trade, and at the southern end is the narrow Bab el-Mandeb Strait. The Suez Canal bring goods between Asia and Europe, while the Bab el-Mandeb Strait serves as a key link between the Mediterranean Sea and East Asia.?

Without this channel, a major portion of the global shipments will have to go around the Cape of Good Hope, which is a much longer and as a result, much more expensive route.

A huge amount of Europe's energy supplies, like oil and diesel fuel, come through that waterway, according to John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80 per cent of the world's commercial fleet. Food products like palm oil and grain and other items brought over on container ships—most of the world's manufactured products—are also shipped through this route.?

As a result, the channel is crucial to maintaining many countries’ political and economic stability. Moreover, free navigation through the Red Sea is also crucial to Israel’s trade and communication with Asia and Africa.?

What is happening in Red Sea now?

Since the airstrikes of the Israel-Hamas conflict of October 7, the Houthi movement has fired over 100 drones and missiles at ships belonging to over 35 countries plying the Red Sea, especially if any of them have links to Israel. They are doing this in support of the Palestinian cause. On November 9, Houthi rebels shot down a United States drone. On November 20, it attacked an India-bound oil tanker.?

On December 3, three commercial vessels—including two Israeli ships the Unity Explorer and Number 9—were attacked by the Houthis via drone and missile. Last week, a merchant vessel MV Chem Pluto, with around 20 Indian crew members, was hit by a suspected drone about 217 nautical miles off the Porbandar coast in the Arabian Sea. Then another cargo ship on its way to India was attacked by drones, allegedly fired by the Houthis. ?

The snowballing crisis in the Red Sea has gravely affected the shipping traffic, in turn impacting the economies of many countries. The inlet, with the Suez Canal, carries about 30 per cent of the world’s container volume, 9 per cent of oil, 6 per cent of gas and accounts for 12 per cent of global sea-borne trade.?

In just the past week, more than 300 vessels have opted out of this route and opted for the 6,000 nautical mile detour around Africa. In Europe and Asia, freight rates have soared by up to 40 per cent. The US has repelled attempts to board other cargo ships and also intercepted several Houthi drones and missiles. However, many cargos have still succumbed to the Houthi attacks. Stabilising the critical waterways is vital to ensure that shipping traffic can fully resume.

How are global economies reacting to the Red Sea crisis?

Last week, the US decided to create an enhanced naval protection force called Operation Prosperity Guardian. A total of 20 countries have agreed to join in the force including the UK, France, Bahrain, the Netherlands, Norway, Seychelles, Spain and others. “We've had over 20 nations now sign on to participate" in the coalition, Pentagon spokesman Major General Pat Ryder said at a press briefing.

The Coalition forces, he added, will "serve as a highway patrol of sorts, patrolling the Red Sea and the Gulf of Aden to respond to – and assist as necessary – commercial vessels that are transiting this vital international waterway." Ryder also called on the Houthis to cease their attacks.

India, which is not a part of the coalition, is also facing the brunt of the crisis as nearly 65 per cent of India’s crude imports pass through the Suez Canal and 50 per cent of its exports use this artificial waterway to ship to the West. Currently, India is exploring ways to protect its supply chain.

Meanwhile, the Houthi rebels have warned Israel, the United States and other Western allies that any hostile move from foreign forces against Yemen will have consequences.