The OECD warns that ongoing tensions in the Red Sea could lead to significantly higher inflation due to a 100% rise in seaborne freight rates, potentially increasing import price inflation across its 38 member countries by nearly 5 percentage points. Major shipping firms began diverting vessels away from Egypt's Suez Canal in late 2023, leading to longer journey times and capacity reduction in the global market. While the shipping industry had excess capacity last year, the OECD is closely monitoring the situation and notes positive data showing inflation coming down among its members. The organization also adjusted its economic growth forecast for the U.S., euro zone, and U.K.
Saudi Arabia's foreign minister expressed deep concern over escalating tensions in the Red Sea due to Houthi attacks and US strikes, emphasizing the need for de-escalation to avoid further conflict in the region. The attacks by the Iran-aligned Houthi militia have disrupted trade and raised alarm among major powers, while the US has resumed strikes on Houthi targets in Yemen and returned the militia to a list of "terrorist" groups. The situation risks expanding the conflict beyond Gaza, where over 24,000 people have been killed in Israel's assault following attacks by the Palestinian Islamist group.
The USS Gerald R. Ford, the world's largest and most advanced aircraft carrier, is set to return to its home port in Norfolk, Virginia, despite recent threats from Iranian-backed Houthi rebels in the Red Sea. The US Navy has successfully intercepted anti-ship ballistic missiles and drones fired by the Houthis, showcasing advanced defense capabilities amid rising naval threats. The Red Sea remains a high-tension area with international efforts underway to protect commercial shipping from Houthi attacks, which have prompted some ships to alter their routes to avoid the region.
