Troubled waters: Impact of the Red Sea crisis on the economies of Egypt, Israel, and Jordan

Date Posted: 21-Dec-2023

Author:  Guy Anderson, London

Publication: Jane's Intelligence Review

Shipping operators accounting for more than 70% of global traffic have paused transits through the Red Sea on security grounds. Guy Anderson assesses the economic implications for Egypt, Israel, and Jordan

Key points

• The cessation of Red Sea transit by some of the world's largest shipping companies in response to attacks against maritime traffic by Yemeni rebel group Ansar Allah poses a threat to the economies of Egypt, Jordan, and – to a lesser extent – Israel
• Egypt faced an immediate drop in income from Suez Canal transit fees while Jordan's crucial commodities sectors will face challenges
• Broader challenges include interruptions to global supply chains and the supply of gas to Europe as winter commences

The significant escalation in attacks by Yemeni rebel group Ansar Allah (also known as the Houthis) against ships transiting the Red Sea led to 13 shipping operators announcing the suspension of journeys through the strategic waterway or the rerouting of services, between 15 and 19 December 2023.

The companies – which collectively account for at least 70% of global maritime freight traffic – announced either pauses to Red Sea journeys or the suspension of services to or from Israel (see table).

Ansar Allah launched its attacks against Red Sea vessels in November in response to hostilities between Israel and Hamas. An initial objective of targeting Israeli-owned or Israeli-controlled shipping broadened to all vessels bound for Israeli ports on 9 December, following a statement by the spokesperson for the Yemeni armed forces aligned with Ansar Allah, Brigadier General Yahya Sare'e, although connections between specific vessels and Israel became less clear as the scale of attacks escalated.

Janes