Dryad Global: Red Sea Attacks Down, But at a Cost

---

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Attacks on commercial ships moving through the Red Sea are on the decline, though the conflict has created something of a fiscal burden for Western allies working to keep vital shipping lanes open, a security report found.

The United Kingdom Maritime Trade Operations center reported Tuesday that two missiles fired from the coast of Yemen struck a Marshall Islands-flagged ship, which was taking on water. The agency said the ship suffered damage, but the crew was safe and the vessel was proceeding to its next port call.

No group claimed responsibility for the attack, though the blame fell largely on the Houthis, a rebel group in Yemen that's backed by Iran. The group ramped up its attacks after militants from Hamas attacked Israel in October 2023.

Attacks, however, have declined, according to Dryad Global's latest Maritime Security Threat Advisory, published Tuesday.

"Attacks on commercial vessels in the Red Sea have dropped in recent weeks, although strikes against coalition forces have remained steady," the advisory read. "While a decline in commercial maritime attacks may be attributed to reduced traffic and rerouting around Africa, evidence suggests a move away from full offensive operations and toward a war of attrition strategy by the Houthis."

Western-backed action against the Houthi group in Yemen has taken out about 25% of the rebel group's arsenal of missiles and drones. But for every $5,000 drone launched by the rebels, Western forces typically respond with $2 million air-defense systems, Dryad said.

There have been no direct attacks on oil or natural gas during the latest flare up of conflict in the Middle East, though the attacks are concerning enough to add something of a geopolitical risk premium to the price of oil. Much of that risk, however, is baked into the price of oil considering the duration of the conflict.

The price for Brent crude oil, the global benchmark, was trading at around $84 per barrel in early Wednesday trading. The price is down about 4% so far this month.

Shipping giant Maersk (Copenhagen, Denmark), meanwhile, said it is rerouting around the Cape of Good Hope for the foreseeable future to avoid the threats in the Red Sea.

Maersk said early this month that the complexity of the situation in the Red Sea is evolving and expanding, with attacks moving further and further offshore.

Despite the lack of direct market impacts, however, Maersk added that it was using 40% more fuel per journey because of the situation in the Red Sea.

The International Energy Agency (IEA) warned too that any supply disruptions could cause "significant economic harm" to the global market.

On the conflict itself, Dryad Global said it would require a long-term effort to eradicate the threat from the Houthi rebel group, which took control of Yemen after a coup in 2014. Western-backed forces may need a new strategy, such as targeting the group directly.

"International coalition troops will most likely have to conduct land operations to lessen the Houthi threat if Houthi strikes continue to impede marine channels in the Red Sea," Dryad said in a report published Tuesday. "The U.S. and U.K. have launched expensive military efforts to fight the danger to international sea waterways because of fear of extended attrition, but the results have been negligible."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).