Red Sea Trade Route Disruptions: Potential Impact on Oil Prices

Disruptions in the Red Sea trade routes, particularly the Bab el-Mandeb Strait, due to intensified attacks by Houthi rebels in Yemen, could impact global energy markets and supply chains, potentially driving consumer prices higher. Major shipping firms, including BP and container shipping giants, have halted transit via the Red Sea/Suez Canal route, leading to rerouting of cargoes via the southern tip of Africa, which adds weeks to vessel journeys and increases costs and delays in world trade. While oil and gas supply is not directly threatened, the increased costs and delays could lead to higher ocean freight shipping rates and ultimately be passed on to consumers, potentially accelerating inflation and impacting global oil demand outlooks.