The Pentagon convinced over seven allies in the Red Sea to join a stronger naval task force due to more attacks on commercial ships by Iran-backed militants, resulting in higher oil prices.
Lloyd Austin, US Defence Secretary, announced Operation Prosperity Guardian just hours after UK supermajor BP announced it would stop all shipments through the waterway citing “deteriorating security conditions”. BP is a major producer of gas and oil in Oman.
The Red Sea is one of the busiest energy chokepoints in the world. It sees more than 9mn barrels of oil per day, or nearly a tenth, of global demand.
The deployment of naval ships, which includes more than half a dozen Nato nations, including the UK, France and regional allies such as Bahrain, comes as Iranian-backed Houthi Rebels in Yemen are increasing their attacks against US assets in that region.
In recent weeks, the number of Houthi attacks against commercial ships has steadily increased. There have been more than 11 since November. The US announced on Sunday that one of their warships, USS Carney shot down 14 Houthi attack drones.
BP’s decision not to go through the Red Sea pushed up oil prices on Monday. Brent, the international benchmark, settled at $77.95 a barrel after rising 1.8 percent.
Austin stated that the new naval task force will work together to “address the challenge presented by this non-state actors who launch ballistic missiles or unmanned aerial vehicles against merchant vessels of many nations transiting international waterways lawfully”.
He will convene an online meeting of international partners on Tuesday in Bahrain to discuss the Houthi escalated.
“We are building an international coalition against this threat,” Austin stated during a Monday stop in Israel.
The defence secretary will visit Bahrain, where the US Navy Fifth Fleet is based, then travel to Qatar and board the USS Gerald R Ford, which is currently in the eastern Mediterranean.
Austin stated that Operation Prosperity Guardian will be part of the 39 member Combined Maritime Forces, and Task Force 153 which focuses on Red Sea.
The US has been stepping up its diplomatic efforts in the Middle East. General CQ. Brown, the chairman of US Joint Chiefs of Staff, was in Israel Monday following a previous visit by National Security Advisor Jake Sullivan. Bill Burns, CIA director, met with Qatari officials and Israeli officials in order to discuss the release more hostages from Hamas’s Gaza prison.
Austin stated that Israel must be “more savage” in its military campaigns during his visit. Austin and his counterpart discussed the shift away from high-intensity operations in Gaza.
Officials said that the US has not ruled out taking military action against Houthi targets, if attacks on ships continue. The US would “take appropriate actions”. . . Sullivan stated earlier this month that he would be happy to meet at a place and time of his choosing.
Before BP announced its decision, energy providers and commercial shippers avoided the Bab el-Mendeb strait, a narrow strait that runs along the southernmost end of the Red Sea. Here, tankers are within striking distance of Houthi rebels.
BP’s pause was a result of Trafigura, a commodity trader that said it would take “additional measures” to protect its own and chartered ships. MSC, Hapag-Lloyd, and Maersk are among the biggest shipping companies in the world that have halted their travels through the Red Sea because of security concerns.
As winter approaches, traders are also concerned about the threat to supplies of Qatari Liquefied Natural Gas to Europe. On Monday, the UK benchmark gas price increased by over 8 percent while the European hub price increased by more 7 percent.
The US has accused Iran of enabling these terrorist attacks. Sullivan said to Israel’s News 12 that Iran was responsible for ending the threat.
Analysts say the attacks raise the prospect of another and longer disruption of global energy and goods shipping, less than 2 years after Russia’s full scale invasion of Ukraine – and sanctions on Russian oil exports – forced a reordering decades-old trade routes for oil and gas.
Raad alkadiri is a managing director of Eurasia Group. He said that the decision by large shippers such as BP to bypass the Red Sea will increase risks and costs.
He said that firms could choose to use the longer, more expensive route around Cape of Good Hope. The heightened political risks are likely to add to the uncertainty surrounding oil supply and demand for 2024.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.