Dubai: Regional tensions and fears of a wider war took centrestage at Davos forum with Qatar prime minister saying that miitary strikes on Yemen will not contain attacks by Al Houthis on commercial shipping lanes in the Red Sea, but an end to the war in Gaza will.
Speaking at the World Economic Forum (WEF) meeting in Davos, Switzerland, Sheikh Mohammed Bin Abdul Rahman Al Thani said that US and British military strikes on Yemen will only create “a high risk of further escalation and further expansion of” the conflict.
US and British forces have responded to attacks on ships by carrying out dozens of air and sea strikes on Al Houthi targets in Yemen since Friday.
He described the current regional situation as a “recipe for escalation everywhere” and said Qatar believes that defusing the conflict in Gaza will stop the escalation on other fronts.
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Bloomberg reported on Monday that at least five LNG vessels operated by Qatar had stopped en route to the Red Sea.
On Tuesday, British oil giant Shell has paused transit through the Red Sea shipping route indefinitely, according to a media report.
About 12 per cent of global trade normally passes through the Bab Al Mandeb Strait, the Red Sea’s entrance between southwest Yemen and Djibouti. But the militant attacks have caused much shipping to be diverted thousands of miles (kilometers) around Africa.
In fact, 40% of Asia-Europe trade normally goes through the area, including a huge amount of oil and diesel fuel for import-dependent Europe. So do food products like palm oil and grain and anything else brought over on container ships, which is most of the world’s manufactured products.
In all, about 30% of global container traffic and more than 1 million barrels of crude oil per day typically head through the Suez Canal, according to global freight booking platform Freightos Group.
HOW ARE HOUTHI ATTACKS AFFECTING TRADE?
Huge shipping container companies, including Maersk, are avoiding the Red Sea and sending their ships around Africa and the Cape of Good Hope. That adds a week to two weeks to voyages and increases costs for for shipping, fuel and more.
At least 90% of the container ships that had been going through the Suez Canal are now rerouting around the tip of Africa, said Simon Heaney, senior manager of container research for Drewry, a maritime research consultancy.
The cost to ship a standard 40-foot container from China to northern Europe has jumped from $1,500 to $4,000, according to the Kiel Institute for the World Economy in Germany. But that is still far from the $14,000 seen during the pandemic.
The delays contributed to a 1.3% decline in world trade in December, reflecting goods stuck on ships rather than being offloaded in port.
WHAT DOES IT MEAN FOR OIL PRICES?
Crude prices rose about 4% following the US-led airstrikes. International benchmark Brent traded at just over $80 per barrel Friday, still down from about $84 on the eve of the October 7 Hamas attack on Israel.
“While this puts upwards pressure on global oil prices, it is unlikely to represent a serious energy supply shock for now,” Simone Tagliapietra, an energy analyst at the Bruegel think tank in Brussels, tweeted.
That could change if the Hamas-Israel and Al Houthi conflicts escalate and lead to trouble at the Strait of Hormuz at the southern end of the Arabian Gulf, he said.
“That would have massive implications for global energy markets,” Tagliapietra said.
HOW IS THE WORLD RESPONDING?
The US is leading a security initiative to protect ships in the Red Sea that includes United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain. Al Houthis have no navy to impose a cordon, relying on harassing fire and only one helicopter-borne assault so far.
Friday’s strikes killed at least five Al Houthi troops and wounded six, the rebels said, without elaborating on what was targeted. It was unclear how extensive the damage from the US strikes were, though the Houthis said at least five sites, including airfields, had been attacked. -- Reuters
Another ship attacked
Also on Tuesday, a commodity-carrying ship was hit by a missile in the Red Sea, a fresh sign of intensifying attacks on merchant vessels in a waterway that key industry groups are cautioning remains too dangerous for navigation.
The Greek-owned bulk carrier Zografia was struck about 122km northwest of Al Saleef, in Yemen, according to Ambrey Analytics.
Tuesday’s attack followed one on Monday that saw a US-owned bulk commodity carrier hit by a missile.
It was unclear why the Greek-owned vessel was hit.
Qatar prefers diplomacy
“We need to address the central issue, which is Gaza in order to get everything else defused...if we are just focusing on the symptoms and not treating the real issues, (solutions) will be temporary,” Sheikh Mohammed Bin Abdul Rahman, who also serves as foreign minister, said at Davois meeting.
“We always prefer diplomacy over any military resolutions,” he said.
Without a viable, sustainable two-state solution in Israel and Palestine, the international community will be unwilling to finance the reconstruction of Gaza, Sheikh Mohammed said.
“The bigger picture cannot be ignored,” he said, urging the international community to require Israel to agree to a time-bound, irreversible pathway to a two-state solution.
“We cannot leave this just at the hand of the Israelis,” he said.
Conflict has spread to parts of Middle East since the war between Israel and Palestinian Islamist group Hamas began on October 7, with groups allied to Iran carrying out attacks in Lebanon, Syria, Iraq and Yemen. -- With inputs from Reuters
