According to WPB, the cost of securing ships navigating through the Red Sea has significantly risen, following renewed assaults on commercial vessels by Houthi forces. This escalation in maritime threats has triggered mounting concern over the stability of one of the world’s most vital shipping corridors.
War-risk premiums for vessels transiting the route between Africa and Asia have climbed sharply, reaching up to 1% of a ship’s insured value—more than double the previous high of 0.4%. For a cargo vessel worth $100 million, this translates into a jump from $300,000 to $1 million per voyage, as explained by Marcus Baker, head of marine and cargo at Marsh McLennan.
The shift in pricing follows two recent attacks, including one on a Greek-owned bulk carrier, Magic Seas, and another on the Eternity C, operated under a Liberian flag. These incidents mark the first major assaults in months, with the Houthi group using firearms, rocket-propelled grenades, maritime drones, and speedboats to execute the strikes. While the attack on Magic Seas has been officially claimed by the Houthis, the group has not taken responsibility for the Eternity C assault, which reportedly resulted in three fatalities.
Baker highlighted the unusual nature of the current insurance landscape, stating that the pace and intensity of Houthi activity is unlike anything seen previously. He added that if shipping continues to pass through the Red Sea, premiums are likely to rise even further.
The Red Sea serves as a critical global trade artery, and growing instability in the region not only threatens maritime safety but also poses broader economic risks. Heightened insurance costs, possible rerouting of vessels around Africa, and potential disruptions to oil supplies and international goods movement are among the cascading effects.
Houthi representatives have justified their actions as retaliation against companies they accuse of violating restrictions related to Israeli ports. Meanwhile, in response to the recent incidents, Israel has launched retaliatory airstrikes targeting Houthi-controlled infrastructure, including key ports and energy facilities. Among the targets was the Galaxy Leader, a vessel previously seized by the Houthis and alleged by the Israeli military to have been outfitted with equipment to aid hostile tracking of international ships.
These developments reflect a rapidly shifting security landscape in the Red Sea, with growing implications for commercial shipping, regional politics, and global supply chains.
By Bitumenmag
Shipping, Vessel, Sea
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