The Strait of Hormuz and Bab Al Mandab waterways hold such particular importance in global trade. Mainly controlled by Arab countries, 35 per cent of the world’s daily oil exports traverse through the Strait of Hormuz, including 85 per cent of Asia-bound oil exports and 20 per cent of gas exports.
As per the International Energy Agency, approximately 10 per cent of worldwide oil trade flows through Bab Al Mandab, constituting 12 per cent of the total volume of international trade. Conversely, a significant 98 per cent of this volume travels through the Suez Canal, highlighting its unquestioned significance since the opening over 150 years ago.
The interconnection linking the trio of the vital passages—the two straits and the Suez Canal—has bestowed upon the Arab region an exceptional strategic significance unparalleled by any other in the world. This importance spans economic, military and geopolitical domains.
This explains the heightened international concern when any of the three passages is subject to threats of closure or when safety is compromised, as is the case with Bab Al Mandab, which is under threat by the Houthi group in Yemen and who attacked a number of the 60 ships that navigate through this corridor daily.
The risks at Bab Al Mandab prompted some major shipping companies such as the Danish company Maersk, Taiwan's Evergreen, and oil giant BP to suspend passage of their vessels through the waterway, and instead redirecting the ships to navigate through the Cape of Good Hope.
This has resulted in significant additional costs and tripling the transit time for their shipments.
Consumers will get full blast of price hikes
Indeed, the impact of increased transportation costs from the rerouting will mainly be passed on to consumers in Europe and Asia, including the Gulf region and other Arab countries. Distributors will also leverage these developments as an opportunity to increase prices beyond the additional transportation expenses incurred.
The most important thing here is related to the Suez Canal, which is of particular importance to the Egyptian economy. If it were not for the Suez Canal, Bab Al Mandab would not have gained all this importance. Similarly, without Bab Al Mandeb, Suez Canal would not have existed.
This has accelerated the speed at which many are coming up with conclusions, or considering alternatives to the Canal, through new road projects or taking advantage of the climate crisis which has enabled ships to traverse the Arctic for the first time.
Indeed, none of these projects, whether China's Belt and Road, or the Indo-European Corridor passing through the Arabian Peninsula, or the Arctic, will serve as replacements for the Suez Canal in any way.
On the contrary, the Belt and Road, for example, encompass a significant portion of African countries, potentially leading to increased ship traffic through the Suez Canal. Continuous work in the Arctic is inherently risky and heavily reliant on unpredictable and volatile climatic conditions, posing potential losses for transportation companies operating there.
This is based on the notion that new projects will accommodate the significant increase in global trade - a capacity that the Suez Canal alone might not be able to handle, despite the recent opening of a new crossing route in the canal.
More pawns than lead actor
The current situation in Bab Al Mandab is nothing but a component in a wider geopolitical conflict, where the Houthis serve as one of its vulnerable tools — an agent who does not represent a dependable force and could readily be halted if the managing forces in the conflict decide to intervene.
The Houthis are nothing more than a pawn on a vast chessboard, taking advantage of the Israeli aggression against the Palestinian people, who have made great sacrifices in their quest to regain their legitimate rights. The Houthis only attempt to achieve gains at the expense of the Palestinians.
The hostile actions by the Houthis do not affect Israel, but will temporarily impact on the revenues of Suez Canal, which is an important financial source for Egypt, a staunch supporter of the Palestinian people.
These revenues are vital for Egypt - last year, the Canal generated revenues amounting to $10 billion.
We anticipate the geopolitical game and its accompanying pressures are temporary and will end soon. The Suez Canal will regain its prominent status among global sea corridors.
None of the proposed projects can compete with or be a replacement for the Suez Canal. The Canal's unmatched advantage lies in its efficiency in terms of time and costs, an aspect that alternate routes will not be able to match.