Houthi Selective Targeting in the Red Sea Could Reshape Global Shipping

The Houthis' declaration that they will not allow Israeli vessels, or vessels linked to Israel, to move in the Red Sea signals to the global shipping industry that one of the most sensitive and important bottlenecks in the world economy is once again becoming a route whose price is no longer determined by classic commercial factors such as fuel prices, sailing distances, and supply and demand balances, but by political identification, complex insurance risks, and assessments of a terrorist organization’s intentions. The Houthis do not need to physically and completely block the Bab al-Mandab Strait for all ships in the world in order to shake the market. It is enough for them to define a broad, vague category of ships considered “Israeli” or “linked to Israel” to force the international financial and logistics system to deal with complex questions of identification and origin. In an industry where one vessel can carry cargoes for dozens of different customers, sail under one country’s flag, be owned by a company registered in a second country, managed by a third company, and financed by international banks, that ambiguity immediately translates into heavy financial costs. Every player in the supply chain is now required to reexamine who the ultimate owner is, what the cargo’s origin is, who the insurer is, and whether an indirect link could make the vessel a legitimate target in the Houthis’ eyes.

After the historic peaks recorded in sea freight prices during the coronavirus period, 2023 was marked by a sharp downward correction. An oversupply of new ships entering the market, a global decline in demand for goods, and the easing of congestion in major ports all returned shipping rates to reasonable and stable levels. Importers, retailers, and manufacturers around the world began to get used again to a reality in which the route from Asia to Europe via the Suez Canal was short, efficient, and cheap. The voyage lengthened by a month when the Houthi attacks, which began in late 2023 as part of a campaign of “solidarity with Gaza,” abruptly shattered that normalization. The world’s major shipping companies quickly realized that the risk to human life and to vessels was too high to continue on the usual route. The immediate solution was to divert ships to the longer route around the Cape of Good Hope in South Africa. The consequences of that move were immediately reflected in the economic charts. In early 2024, the Freightos Baltic Index showed that the average shipping price from Asia to Northern Europe jumped to $5,492 per 40-foot container, while on the Asia to Mediterranean route the price surged to $6,773. At the same time, the market analysis platform Xeneta estimated that on certain routes from the Far East to the Mediterranean, prices crossed the $6,500 per container threshold, a jump of about 240% within a few weeks from the start of the escalation. Later in 2024, shipping rates on the main routes reached unprecedented levels of $8,000 to $10,000 per container, mainly because of the shortage of effective capacity caused by longer sailing times.

During 2025, some stabilization and a gradual decline in prices were recorded. The market began to adapt to the long African route, and new container ships entering service increased global capacity supply. In early 2026, as the shipping industry began testing the waters for a gradual return to the Red Sea, it became clear that the surface remained volatile. As of the end of May, the spot price from the Far East to the Mediterranean stood at $4,304 per 40-foot container, while the price from the Far East to Northern Europe stood at $2,860. These figures show that the market entered the current wave of threats already vulnerable, worn down, and factoring in an inherent risk premium. A ship sailing from Asia to Europe or to Mediterranean ports via Africa adds 10 to 14 sailing days to its route in each direction. This extension imposes major direct operating costs, from increased fuel consumption to the need to deploy additional ships on the same line in order to maintain a regular sailing frequency. According to official OECD estimates, such a detour adds about $1.7 million to the cost of sailing a medium-sized container ship, meaning a direct operating addition of $272 per 40-foot container. But that is only the direct operating component. In practice, the market also prices in uncertainty, war-risk premiums, emergency surcharges, and a loss of reliability.

The country most directly and immediately harmed geopolitically and regionally by the ongoing crisis is Egypt. The Suez Canal is not only a national symbol, but also one of the most important sources of foreign-currency income for the Egyptian economy. When shipping companies abandon Suez and move around Africa, Cairo immediately loses the expensive transit fees. The Red Sea crisis has already exacted a heavy toll of billions of dollars on the Egyptian economy. Egypt’s President, Abdel Fattah el-Sisi, even said that revenue losses amounted to about $7 billion in 2024. Egypt has a supreme interest in restoring international confidence in the Suez Canal transit route. But maritime confidence is an asset built over years and can collapse within days. Shipping companies do not change global shipping strategies based on a reassuring political statement or one week of relative calm. They need sustained stability, affordable insurance premiums, and the ability to provide customers with reliable and accurate schedules.

This upheaval does not stop at Egypt’s borders, it is redefining the map of risks and competition among the region’s ports. Major ports in the Mediterranean, the Red Sea, and the Persian Gulf are finding themselves in a new operational reality. Ports such as Jeddah, Yanbu, Aqaba, Ain Sokhna, Port Said, Piraeus, Genoa, Haifa, and Ashdod are no longer competing only on efficiency and loading and unloading fees, the leading parameter today is the reliability of the access route.

From a broader macroeconomic perspective, the current crisis is creating a dangerous risk linkage between the Bab al-Mandab Strait and the Strait of Hormuz. For decades, the energy and logistics world tended to treat these two straits as completely separate risk arenas. The Strait of Hormuz was seen as the sole bottleneck of the global energy market, through which a significant share of crude oil and liquefied natural gas from the Persian Gulf passes to global markets. Bab al-Mandab was seen as the main gateway for container and general cargo trade between the Indian Ocean, Asia, and the Suez Canal. A gallery view. Now these two risks are converging into one vulnerable maritime space.

As the entire Persian Gulf is in a high state of geopolitical tension, countries such as Saudi Arabia and the United Arab Emirates are emphasizing the importance of their inland bypass routes as a strategic safety net. This includes the Saudi East-West oil pipeline, which carries oil directly to the port of Yanbu on the Red Sea coast, and the Habshan-Fujairah line in the UAE, which allows oil to be routed outside the shores of the Strait of Hormuz. But once the Red Sea becomes a threatened and unstable arena, the strategic and economic value of those bypass routes erodes significantly. The Houthi threat is no longer limited to containers of consumer goods, it is now a dominant component in the global energy security map. According to the U.S. Energy Information Administration, the flow of crude oil and petroleum products through the Bab al-Mandab Strait fell from an average of 8.7 million barrels per day in 2023 to about 4 million barrels per day on average in January to August 2024. This structural change shows that the global energy market was already actively moving away from the area, but doing so while bearing high costs and built-in inefficiency.

If the Strait of Hormuz and the Bab al-Mandab Strait are simultaneously threatened, the global financial system will no longer be pricing one dangerous route, but an entire maritime space in which every logistical alternative depends directly on another threatened alternative. The most central and likely scenario in the markets is continued high volatility. As long as the Houthis maintain a high level of verbal threat, without large-scale military implementation in practice, some shipping companies may continue to test a measured, slow, and controlled return of certain ships to the Red Sea route. However, one successful attack, or actual damage to a single vessel, would be enough to completely halt the recovery trend and send large shares of global capacity back to the longer and more expensive route around Africa.

The more severe and dangerous scenario for the global economy is the transformation of the Houthi threat into a permanent and institutionalized policy of “political filtering” in the Red Sea. In such a case, international shipping companies would not face a simple professional and safety decision about whether the route is safe for navigation, but would be forced to decide whether they are prepared to operate trade lines in an area where vessel ownership structure, cargo identity, and even the geographic location of final customers could all constitute immediate grounds for military attack. This is a risk that the major insurance companies struggle to price and cover in conventional policies.