Late 2023 shook up the Middle East, as the Hamas attack on Israel and the continuous war in Gaza proceeded. As such, the illusion of regional stability faded. Not only did this war catalyze further regional polarization, it also got third party actors involved. Among others, the Houthis expressed their solidarity with Palestine and- Hamas and its unconditional support, claiming themselves to be part of the “Axis of Resistance” against Israel (and the United States). Thus, the consequences are felt in the Red Sea, where Houthi militias threatened any commercial ships affiliated to Israel in an attempt to show solidarity with the Palestinian cause.

As a result, regional security at the Red Sea plummeted, leading maritime transportation companies to provisionally suspend shipping routes usually passing through these waters. This measure not only impacted its riparian countries, but also global actors. As the Red Sea and the Bab El Mandeb Strait leads to one of the most important maritime chokepoints, the Suez Canal, Houthi attacks impact the global economy. Cargo companies re-routed their lanes to circumcise Africa, increasing cost on time, personnel, and fuel. This research assesses the extent the Houthi attacks impact the global economy, and how regional and global powers react to mitigate its effects.

Who are the Houthis?

To explain rationale and developments of the Houthi attacks in the Red Sea, it is inevitable to understand the nature and rise of the Houthis in Yemen. They are known as Ansar Allah, which translates to “Supporters of God”, and represent the Zaydi, a Shia minority within Yemen. Further, they antagonize the internationally recognized government of Yemen, which traditionally is of Sunni affiliation. Since starting operations in 1994s, the Houthis are a family business, first led by Hussein al-Houthi, and since 2004 by his brother, current leader Abdul-Malik al-Houthi.

Domestically, the Houthis rose in significance when they conquered the Yemeni capital city Sana’a and its governmental buildings when the civil war began in September 2014. The recognized Yemeni government, then led by President Abdrabbuh Mansur Hadi who fled to Saudi-Arabia, had to concede control over large parts of Northwestern Yemen to the Houthis, which at some point expanded their grip on Yemen all the way to Aden. At the request of the exiled Yemeni political leader, a Saudi-Arabian intervention started in 2015 to combat Houthi control. The effort named “Operation Decisive Storm” was further supplemented by a Saudi-led Naval blockade. The coalition of the UAE, Sudan, Bahrain, Qatar, Egypt, Jordan, and Morocco logistically supported by the United States (US) managed to support government forces in regaining southern parts of the country including Aden, but failed to ensure control over important parts of Yemen including the capital. After the US pulled support and the coalition failed to make up further ground, both sides agreed to a ceasefire in April 2022. The ceasefire calmed down the conflict, but did not yet lead to a final peace treaty (Boussel, 2023).

As of most recent, the Houthis control roughly a quarter of the Yemeni territory. This territory, however, hosts both the capital and around 24 million of the total 34.8 million Yemeni people, which amounts roughly to 2/3 of its population. Within the Houthi controlled most populous part of Northwestern Yemen, observers cite the population going through a severe humanitarian crisis (Auslandsjournal, 2024). Further regions are divided between the Saudi-backed internationally recognized government forces and a third UAE-backed secessionist faction in Southern Yemen.

In foreign affairs, the Houthis aim for a “global Islamic Caliphate”. The Houthi flag describes its motto: “God is the Greatest, Death to America, Death to Israel, A Curse Upon the Jews, Victory to Islam” (Bahfi, 2020). In line with this paradigm, the Houthi information minister describes war against the US as an “honor” and deters Europe from getting involved by threatening with significant retaliation (Al-Dawsari, 2024). They describe their conflict with Saudi-Arabia and the UAE as a fight against “non-believers” and are backed by Iran as part of their “Axis of Resistance”. This alliance – beyond Iran and the Houthis – includes the Zaynabiyoun Brigade and Fatemiyoun Division in Syria, Hezbollah in Lebanon, Hamas and Palestinian Islamic Jihad, Kataib Hezbollah, Asaib Ahl al Haq, and Harakat Hezbollah al Nujaba in Iraq, Al Ashtar Brigades and Saraya al Mukhtar in Bahrain (Wright, 2024). While this axis unites in their emphasized enmity with Israel and support for Palestine, Iran coordinates supporting allies within the axis with resources and training. Yet, Iran prioritizes domestic matters over regional affairs, and the Houthis pragmatically act as an autonomous entity with distinct ambitions regarding Yemen and the war in Gaza (Chatham House, 2024). Thus, the Houthis cannot be generalized (as some commentators do) just as a piece of the Irani puzzle, but must foremost be analyzed individually as an independent actor.

Why are the Houthis attacking ships?

This independence, often overlooked or marginalized in a simplification of global and regional tensions claiming a Yemeni proxy conflict between Iran and Saudi-Arabia, matters to understand Houthi behavior in the international context. When the Houthis started acting in the Red Sea on 19 November 2023, the accompanying reasoning is more likely the distinct affiliation to the cause of Palestine and enmity to Israel than a coordinated, Iran-driven approach of common resistance.

On that day, the Houthis hijacked the Galaxy Leader, a container vessel traversing through the Red Sea. Since then, both the ship and its crew are held hostage. The Houthis claim to target Israeli-owned, -flagged or -operated ships, or ones heading to Israeli ports. However, many of the attacked vessels lack such connection to Israel (BBC, 2023). The captured Galaxy Leader neither has a crew connected to Israel, nor cruises under Israeli flag of call or charter operator. However, it belongs to the British company Galaxy Maritime Limited, which is in the possession of Ray Car Carriers owned by Israeli businessman Abraham Ungar. Thus, the hijacking fits the narrative, – and confining its non-Israeli crew proves that Houthi intentions go beyond directly affecting Israeli assets (finding here an attack on Israeli supported ship).

Since November, the Houthi strategy evolved around armed hijacking and drone attacks. With increasing military presence in the Red Sea and specifically the Bab-El-Mandeb straight, Houthi attacks grew in frequency. Houthi leaders narrate its maritime attacks, alongside the rockets fired targeting Israeli territory, as protective measure in favor of the Palestinian people in Gaza. Its claim of “supporting everybody that attacks Israel” translates to both a domestic mobilization strategy as well as a foreign signal towards its “Axis of Resistance”. Houthi determination to take action meant to benefit the Palestinian people gained widespread positive reception within Yemen and Muslim communities over the globe, especially the Middle East (Tekin, 2023).

This implies both a domestic and a foreign dimension to the realm of Houthi decision-making. Inside Yemen and within the Arab world, the anti-Israeli narrative rallies both national and regional support for the case against foreign oppression of Muslims, especially by Israel and its Allies. This is not only effective because it depicts the Houthi as heroes, it also singles out less outspoken and active actors that are known regional antagonists, such as Saudi Arabia. Internationally, the Houthi attacks attract maximum publicity, no matter whether the reception is positive by some or negative by others. This empowers breadth and strength of their narratives, specifically regarding the ongoing conflict in Gaza (Kendall, 2024).

The official Houthi narrative claims that its attacks aim at pressuring Israel into giving in to a Gaza ceasefire. In turn, this leads to the assumption that an Israel-Palestine ceasefire would be the main precondition for an end of attacks, and to achieve that the attacks would impact Israel the most. Practically however, the impact on Israel is relatively insignificant. Instead, it is rather the collective global economy that struggles under the Houthi attacks, as the impact of the Red Sea on regional security and the global maritime economy is massive. Thus, the Houthi attacks in the Red Sea rather turn into a geopolitical matter of regional and global geoeconomics impacting powerful stakeholders on both sides of the Israel – Palestine conflict.

Why is the Red Sea so important?

The geoeconomic perspective displays the importance of the Red Sea, and thus the significance of regional Houthi attack impact. Such attacks, however, translate less into direct impact on Israel as one would anticipate given the Houthi narrative. Israel has a port on the Red Sea, in Eilat, but it only accounts for five percent of Israeli maritime trade. Instead, from an economic and logistic perspective, the Mediterranean ports in Haifa or Ashdod are far more impactful. Other regional actors, such as Jordan, Sudan, Eritrea, or Egypt as host of the Suez Canal, are more dependent on the Red Sea, and economically suffer more directly from Houthi attacks and their impact on regional economy.

The perception changes when shifting perspectives from the regional to the global impact of the Red Sea: the Bab-El-Mandeb Strait straight right off the coast of Western Yemen, where most of the attacks happened, ultimately leads to the Suez Canal. The canal is the second most important maritime chokepoint, behind the Singapore straight, yet ahead of passages such as the Panama Canal. About 12% of global trade passes through the Suez Canal and thus the “Gate of Tears”, and nearly a third of global containership traffic which leads up to an average of 50 merchant vessels traversing every day. It is the fastest route linking China, South East Asia, and India to Europe and Russia, while also serving as key export route for the Arab World in both directions.

In this regard, the Bab-El-Mandeb Strait majorly influences the trade of energy resources. It is part of the major oil and gas route, thus Houthi interference likely is extensively detrimental for the Persian Gulf states. 10% of global seaborn oil and 8% of global Liquefied Natural Gas (LNG) trade passes through the chokepoint. This not only has economic implications, but also matters from a geopolitical perspective within and beyond the region. Reduced Bab-El-Mandeb traffic hurts Arab countries that export crude oil to Europe. Especially Qatar suffers under LNG export dependency through that route. As Houthis and many of the most impacted Arab countries had a recent history of enmity, this impact may not be undesirable, but could impede the ongoing peace talks with the Saudi-led coalition.

On a more global scale, the attacks also negatively impact actors more friendly related to the Houthis: Steady passage through the Red Sea is a major security concern for Russia, Kazakhstan and Azerbaijan in their oil and gas exports towards Asia, especially as land infrastructures lacks the desired capacity for alternative transfers. Likewise, China depends on the Suez Canal for export optimization towards Europe and described energy imports. Further, Europe depends on the Suez Canal for importing manufactured goods from Asia and energy resources from the Persian Gulf. Finally, the Suez Canal passages usually accounts for 10% of the Egyptian governmental budget, a number that is significantly reduced when there is less traffic, which causes detrimental effects on the already struggling Egypt economy. Those are all global and regional powers important to regional developments, hence interference may lead to undesirable outcome for Houthi relations within the region.

How vast is the impact of the Houthi attacks on the world economy?

Not only the regional, but also global economy overall suffers from the attacks. This is mainly due to higher shipping costs and the usage of alternative, longer routes. Several of the most important shipping companies – like Maersk, Hapag Lloyd, BP, Equinor, Evergreen, MSC, Cosco, and CMA CGM – avoided the Red Sea at some point and traversed longer routes. The only viable sea alternative circumcises Africa instead, a route that takes seven to ten days longer and adds 3,300 nautical miles (7,400 kilometers) on top of the usual route passing the Bab-El-Mandeb Strait and the Suez Canal. Traffic within the attacked route decreased by thirty percent between mid-January and early February 2024.

The costs of alternative routes go beyond the temporal ones: the longer route raises overall expenses by 15%. Businesses have to spend more money on fuel and on personnel, as the crew has to be hired for longer time and hours. Indirect effects add to such struggles: the shift towards travelling around Africa instead of going directly through the Bab-El-Mandeb Strait absorbs up to 20% of the global merchant fleets capacity. This leads to more shipping delays, and thus a circle of increased cost. Before the attacks, merchant fleets had access capacity and ocean freight prices were decreasing (PBS NewsHour, 2024). Now, the freight cost per 40ft container increased from $1,000 at November 2nd to $1,400 at December 14th and up to close to $5,000 at January 25th (BBC News, 2024).

Thus, shipping companies are temporarily stuck in a lose-lose situation. Either they take the longer route around Africa and bear the accompanying costs, or they invest into protection alliances and pay inflated insurance prices while prone to the risk of being on the wrong side of Houthi attacks. No matter the choice, the likely outcome in the short, and especially the medium-term until the crisis is solved, is higher shipping cost, which translates into higher cost for consumers. Beyond the general increased cost, some more vulnerable industries may be especially prone to the crisis. Due to its significance to the European and Asian energy market on both producer and consumer side, Houthi attacks may elicit another energy (price) crisis in its fragile environment.

How does that impact influence regional dynamics?

After establishing how effects of the Houthi attacks exceed targeted entities and impact global macroeconomic tendencies, it is important to grasp how such effect trickles down on regional dynamics. As almost every regional power suffers under the impact on maritime trade through the Red Sea, the Houthis both face positive spillover effects from struggling enemies, but also ally alienation. Houthi decision-makers try to mitigate that, for example by granting vessels of specific flags safe passage. But with the somehow indiscriminate nature of the attacks and taking into account the adaptation strategies by shipping companies, such selective carte blanche cannot be applied effectively. Further, such effects would not translate onto the increased indirect cost of passages, such as the insurance cost and protective measures.

The matter of Red Sea and Suez Canal dependence also causes friction within the Arab world. In its communication, Muslim communities almost unanimously express their support for Palestine, while voicing different levels of escalation in their condemnation of Israeli behavior in Gaza. That is why the Houthi receive widespread regional support, and for as long as they are in an open conflict narrated against Israel, they are likely safe of domestic attacks by its foes and foreign interference by Muslim countries into their domestics interests in the Yemeni peace process and national dialogue and governance (Chatham House, 2024).

However, Arab countries are torn in their general perception towards the Houthis as most, especially Sunni actors, back the internationally recognized Yemeni government. With the economic impact on countries dependent on the Red Sea – not limited to but especially impacting Egypt, Jordan, Sudan, Eritrea, Djibouti, and Ethiopia directly for import dependence, and Arab World actors exporting on the global market indirectly – countries balance publicly expressing support for the Houthis effort for the Palestine case while also working on solutions stopping the attacks and their impact. The positive coverage of the dominant Arab information medium, Al-Jazeera, impacts the popularity of this narrative especially on grassroot level. Still analysts expect countries like Egypt, Jordan, and Saudi-Arabia to be three of the countries anonymous by choice in a US-led coalition trying to re-secure the Bab-El-Mandeb Strait. Given the history of regional opposition to the Houthis and the economic implications, it is not unlikely that further regional actors covertly oppose Houthi actions.

How do powerful global entities react?

The described US-led coalition is part of a joint effort of commercial and state actors to increase defense and overall security capabilities in the “Gate of Tears”. Besides defensive strategies abstracted from successful anti-Pirate mission measures at the Horn of Africa in the early 21st century, companies invest into different capabilities to adapt to more sophisticated and technologically advanced attacks. However, companies lack resources to combat drones and helicopters. Instead, vessels turn off their trackers to prevent identification, especially when assumed to have ties to Israel. Further, ships attempt deterrence strategies, such as changing their destination signals to “armed guards on board” (Wall Street Journal, 2024).

The more impactful action, however, is state-driven. As the United Nations Security Council resolution to release hostages, which got implemented despite abstentions by Russia, China, Algeria, and Mozambique, failed to materialize, and corporate deterrence measures appeared ineffective, a multinational taskforce entitled “Operation Prosperity Guardian” (U.S. Department of Defense, 2023) in early December 2023. Its leaders claim to act as a matter of zero tolerance against threats to freedom of navigation (United States), while describing their action as limited and proportional act of self-defense (United Kingdom). Known participants to the operation besides the US and the UK are Australia, Canada, Bahrain, the Netherlands, Norway, and ten “secret” countries. As described, those are countries the crisis likely incentivizes to act due to its threat to economic or security interests, such as Arab countries and economic maritime powerhouses, but that at the same time shy away from the limelight of opposing anti-Israeli resistance in support of Palestine (Deutsche Welle, 2023).

This taskforce escorts vessels and shoots down rockets with disputed effect. It led most maritime companies to re-enter the Red Sea, until attacks intensified again on the 2nd of January 2024. There, in defense of a Maersk boat, the coalition stopped a hostile Houthi takeover killing ten soldiers. Despite the successful prevention, vessel carriers returned to avoiding Bab-El-Mandeb passages. Consequently, the coalition increased the urgency of its measures, running airstrikes against Houthi attack capabilities. They described their airstrikes on January 11th and 12th as retaliation acts for January 10th attacks on a United States vessel. Further attacks on military targets followed in the next days, following retaliate patterns against one another.

However, researchers describe airstrike success as more symbolic than effective. While restricting Houthi attack capacity in the short term, their experience of withstanding Saudi-led attacks over the ongoing civil war and established supply chains supported by Iran are unlikely to be sustainably impeded by the scope and severity of current coalition airstrikes. Instead, Bromley describes them as danger in potentially evoking more severe repercussions in the shape of a regional escalation loop in which the Houthis and the coalition trade intensified attacks and retaliations (Kalin & al-Batati, 2024). Similarly, the United Nations warns that spillover effects from such potential escalation loop may further infringe the already devastated humanitarian situation of the Yemeni population. The US move to label the Houthis a terrorist organization further contributes to a potential escalation as it triggers sanctions that not only freeze Houthi assets, but also assets of their supporters, such as several Iranian institutions (Al-Jazeera, 2024).

This could translate to wider implications on regional security. As peace talks between the Houthis and both Saudi Arabia and the UAE were gaining traction in 2022, those stalled before the crisis and appear farther away ever since. Experts identify the potential to interfere with the regional balance of power (Şeker, 2024), which could also further intensify tensions between Iran and Saudi-Arabia (Aboudouh, 2024). Others describes the polarization of positions tying the Houthi attacks to the conflict in Gaza, while outlining the dilemma of countries torn between ideological support for Gaza and economic and security concerns regarding the Houthis (Al-Atrush & Porter, 2024).

Further, the Houthis are interested in mitigating its negative impact towards its supporters, first and foremost Iran. To avoid a crisis with Iran’s allies, on January 19th the Houthis promised safe passage for Chinese, Russian, and “certain other ships”, while excluding vessels “in any way connected with Israel.” (Baram, 2024) This measure proves that the Houthis acknowledge the impact of their attacks beyond the conflict in Gaza. It also displays their intent to steer such spillover effects in favor of themselves and their allies.


Overall, from an economic perspective it is questionable whether the reaction of global entities, most specifically the US-led “Operation Prosperity Guardian”, can achieve a re-normalization of the Bab-El-Mandeb Strait passage and thus the maritime traffic through the Suez Canal chokepoint: in the three weeks before the first US and UK strikes, there have been six Houthi attacks. This number rose to nine attacks in the following three weeks (BBC News, 2024), showing an increase rather than a decrease. Further, the attacks did not decrease in severity, hinting towards rather escalation than de-escalation. As a reaction to concentrated efforts on the Bab-El-Mandeb Strait, the Houthis took further measures to inflict pressure, such as expanding the attack range into the Gulf of Aden.

Since the start of the attacks, mitigation measures did not sustain safety for shipping vessels to pass through the Bab-El-Mandeb Strait and thus the Suez Canal. While there has been brief success in convincing the most important cargo companies to re-route their routes through the region, the consistent influx of attacks fuels corporate skepticism and skyrocketing insurance prices. Thus, in the medium term, the impact of cost increases in shipping from Europe to Asia and back will not only affect companies via rising shipping costs, but is also likely to trickle down onto producer and consumer prices. In a global economy still recovering from Covid impact and global conflicts, the Houthi attacks, whether intentional or not, increase pressure on regional and global economies to act. Whether such action benefits or impedes their voiced intentions of achieving a Gaza ceasefire and ultimately an independent Palestinian state,  Israel – going by their strategies and history – is unlikely to back down to such demands with its relative indifference towards the Bab-El-Mandeb issues. Israel instead is more prone to indirect pressure of the more affected actors than by the attacks themselves.

In the geoeconomic long run, the vulnerability of supply chains through this maritime chokepoint is another incentive for the ongoing tendencies of countries on-shoring their supply chains to achieve more self-sufficiency. This strategy intends to entangle weaponizable interdependencies, aiming at controlling as many crucial supply-chain chokepoints as possible either by oneself or withing a network of trusted “friends” (Maihold, 2022). It would reduce the potential of hostile entities to coerce one through economic strangleholds (Farrell & Newman, 2019), as in the case of the Houthi attacks.

For countries heavily impacted by the economic fallout of the Houthi attacks, the contemporary crisis leaves three options: maintaining the status quo, which is bound to lead to economic struggles, but moderate geopolitical impact. Applying more pressure on Israel to end the war, and then holding the Houthis accountable to stop the attacks as proclaimed, of which the likelihood is uncertain. Or applying more pressure on the Houthis, with increased military measures such as more proactive strategic airstrikes. But both Israel and the Houthis have a history of being resilient to fierce outsider efforts to interfere with their interest and measures, thus the latter options are unlikely to sustain without heavy geopolitical concessions and escalation risks (Chatham House, 2024). The Houthi further proved an indifference towards casualties if benefitting its greater goods, thus its leaderships appear resilient to increased foreign interference and the potential harm it would inflict of Yemeni people. Thus, regional or international actors – such as the US or Saudi Arabia – that recently failed to sustain regional influence when their interests demanded such, are not likely capable of deterring the Houthis (Kendall, 2024). There is a lot at stake in this conflict for both Arab and global actors. It therefore is likely that outside influences rather stomach the economic burden coming with the Bab-El-Mandeb status quo than risking severe geopolitical fallout from distinct intervention with one side or another.



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Disclaimer. The views and opinions expressed in this analysis are those of the authors and do not necessarily reflect the official policy or position of MEPEI. Any content provided by our authors is of their opinion and is not intended to malign any religion, ethnic group, club, organization, company, individual, or anyone or anything.

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About the author:


Birger POMMERENKE holds a BA in Political Science and Economics from Leuphana University Lüneburg, and studies for MA Comaparative Public Governance at Uni Münster and MSc European & Global Studies at University of Twente. His research focuses on economic and geopolitical international order contestation and strategic governance.

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