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Shell stops transit through the Red Sea amid escalating conflict with Yemen’s Houthi rebels

British oil giant Shell suspended all its shipments through the Red Sea last week following escalating conflict between the US and UK and Yemen’s Houthi rebels. The report comes from the Wall Street Journal citing “people familiar with the decision”. 


Tensions in the Red Sea have risen following strikes by the United States and the United Kingdom on numerous locations in Yemen under rebel control last Friday. The strikes were a response to the Houthi assaults on shipping passing through the Bab al-Mandeb Strait in the Red Sea, which have been causing major disruptions in maritime trade.


In reaction, Houthi rebels have announced that they now deem US and British vessels “legitimate targets” and will no longer only target Israel-linked ships. In December, a Shell tanker passing through the strait was targeted by a drone and harassed by Houthi boats, according to the WSJ. 


Shell has stopped its shipping passing through the strait as a precautionary measure, concerned that a successful attack could cause a major oil spill as well as put vessel personnel at risk. It follows the example of Shell’s rival BP, Qatar Energy, and Maersk, now diverting their ships around Africa. 


The Wall Street Journal said Shell declined to confirm whether it would stop all shipping through the route indefinitely. 


Twelve per cent of world trade passes through the Bab al-Mandeb Strait into the Red Sea and out through the Suez Canal. Geopolitical instability places a premium on oil prices as the diversion of vessels adds approximately two weeks to their shipping time. When BP decided to stop shipping through the strait in December, analysts predicted that if other major oil firms followed suit, prices could rise.


OANDA analyst Craig Erlam told Reuters that "oil markets are still sensitive to tensions in the Middle East, but the base case remains that we'll see no significant disruption to flows".


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