International Desk: Several regional and global situations, such as the Gaza war and Houthi attacks in the Red Sea, have changed the geopolitical climate of the Middle East. Trade routes have become dangerous due to US and Houthi attacks centered on the Gaza war. In this situation, the world’s major shipping companies have already stopped shipping on the Bob-el-Mandeb route.
As a result, the course has to be changed, and the cost has also increased. Irregularities are constantly disrupting the global supply chain through the Red Sea. All in all, the Red Sea is in dire crisis, which will affect world trade and threaten the world economy.
Former US President Donald Trump said in 2020 that he would end the historic conflict between the Arab states. Following the Saudi-Iran accord in March 2023, Middle East analysts had hoped the region had begun its journey towards peace with an optimistic outcome. But suddenly, this hope turned into disappointment. The Israel-Hamas conflict ends the peace path. Israel’s brutal killings in Gaza shocked the whole world. As a result, the conflict started again in South Lebanon and the Red Sea. The Red Sea connects Bob el-Mandeb in the Gulf of Aden with the Suez Canal.
About 13 percent of trade and about 30 percent of container traffic are transported through this route. But recently, this route has become dangerous due to the attacks by the rebels. Seven of the top ten shipping companies have suspended the Red Sea route for their transportation operations.
Which includes the Chinese state-owned ‘Cosco’. It is the fourth-largest shipping company, contributing 11 percent of global trade. Similarly, many US and European companies have shut down their operations, citing disruptions in global supply chains.
Unfortunately, this situation will have an impact on global inflation. The economy of Europe in particular will be greatly affected. Because about 40 percent of the trade between Asia and Europe goes through the Red Sea, About 12 percent of oil and 8 percent of liquefied natural gas (LNG) pass through the Suez Canal. Crude prices have risen 4 percent since the U.S.-led offensive against the Houthis. The freight rate for a container ship increased from $1,500 to $4,000. Prices of domestic consumption goods in Europe may also rise.
In addition to the Gaza war, the Russia-Ukraine war and Moscow’s subsequent sanctions have already raised prices in Europe. According to experts, only through sustained dialogue, constructive engagement, and multilateral cooperation can the region move towards a peaceful and prosperous future. This step will help not only the countries of the Middle East but the entire world community.
