Its already happened, aside from the damaged ships, and the increases in shipping costs, there is not enough spare shipping to compensate for having to re route trade the long way. So, supply disruptions, cost increases. 2022 again.
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Davos | Iran has declared it wants to restore maritime security in the Red Sea not escalate the dispute, with a top minister saying attacks on ships there would stop if Israel halted its military operations in Gaza.
But Foreign Minister Hossein Amir-Abdollahian’s seemingly emollient comments on the Red Sea came as Iran launched a third missile strike on a neighbouring country in as many days. The target was an Iranian militant group in Pakistan, which responded furiously. That followed earlier hits on targets in Syria and Iraq.
It’s Israel’s fault not ours or our allies, says Iranian foreign minister Hossein Amir-Abdollahian. AP
Iran’s intervention also came as major freight companies warned that the Red Sea attacks could lead to shortages of vessels within weeks, as fleets become tied up taking the longer route around Africa – with a knock-on effect on prices that could kindle inflation.
Mr Amir-Abdollahian said Iran did not want to escalate the instability in the Red Sea, where Tehran-backed Houthis have been attacking cargo vessels, prompting US-led retaliatory strikes on sites in Yemen.
But speaking to an audience at the World Economic Forum in Davos, he said the Houthis had been responding to attacks on them, and their action was also motivated by Israel’s military campaign in Gaza.
He said the Red Sea was “now tied to events in Gaza” and it would be “to all our detriment” if the attacks on the Palestinian enclave did not stop.
“If the genocide in Gaza stops, it will lead to the end of other attacks and crises in the region,” he said.
He said Tehran had warned that this would happen, but this “does not mean we want to play a role in the enlargement [of the conflict], no, it is because we have a proper understanding of the region”.
“We do care about maritime security and shipping safety. Our oil exports are done by sea,” he said. “The security of the region is our own security.”
The US military fired another wave of missile strikes against Houthi sites on Wednesday, multiple US officials said, marking the fourth time in days it has directly targeted the group in Yemen. US Secretary of State Antony Blinken said the US also plans to designate the Houthis as a global terrorist group.
Meanwhile, business leaders lined up to express concern about the looming likelihood that the Red Sea instability will start to disrupt supply chains and drive up costs.
“This is extremely disruptive because you have close to 20 per cent of global trade that transits through the Bab al-Mandab Strait to the Red Sea],” said Vincent Clerc, CEO of the shipping giant Maersk.
“It’s one of the most important arteries of global trade and global supply chains, and it’s clogged up right now,” he told Reuters Global Markets Forum in Davos.
Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending them on a longer route around Africa or pausing until the safety of vessels can be assured.
Freight rates have more than doubled since early December, according to maritime consultancy Drewry’s world container index, while insurance sources have told Reuters that war risk premiums for shipments through the Red Sea are also rising.
The alternative shipping route around South Africa’s Cape of Good Hope can add 10 to 14 days to a journey versus travelling via the Red Sea to the Suez Canal.
DHL Group boss Tobias Meyer told a Davos panel that a shortage of container ships could start before the end of the month, with particular impact on Asia.
“The back-flow is currently not happening at the pace people were planning for, so that’s something to monitor,” he said.
Amin Nasser, CEO of Saudi oil giant Aramco, told Reuters in an interview that tankers would be available in the short term, “but if it’s longer term, it might be a problem”.
At Davos, Mr Amir-Abdollahian was accused of hypocrisy for justifying Tehran’s attacks on terrorist groups in third countries while criticising Israel for doing the same. He rejected this, saying Hamas was “a Palestinian liberation movement” not a terrorist group.
He said he had notified Pakistan’s foreign minister beforehand of the missile and drone salvo against separatist Sunni terrorist group Jaish al-Adl in Pakistan’s Balochestan Province on Tuesday (Wednesday AEDT).
But Islamabad has responded by recalling its ambassador to Iran and barring Tehran’s envoy from re-entering the country over the “unprovoked and blatant breach” of its sovereignty. It said the strike killed two children and injured three others.
Mr Amir-Abdollahian was unapologetic: “We don’t allow national security to be compromised or played with, and we have no reservations, no hesitations when it comes to our national interests.”
But the attack is only likely to inflame regional tensions, which were already roused by an Iranian hit on an alleged Israeli spy base in Iraqi Kurdistan. Mr Amir-Abdollahian said his government would “respond vigorously” to any Israel attack.
Iran also this week fired missiles at ISIS targets in Syria following a lethal attack claimed by the terrorist group earlier this month.
*****
Davos | Iran has declared it wants to restore maritime security in the Red Sea not escalate the dispute, with a top minister saying attacks on ships there would stop if Israel halted its military operations in Gaza.
But Foreign Minister Hossein Amir-Abdollahian’s seemingly emollient comments on the Red Sea came as Iran launched a third missile strike on a neighbouring country in as many days. The target was an Iranian militant group in Pakistan, which responded furiously. That followed earlier hits on targets in Syria and Iraq.
It’s Israel’s fault not ours or our allies, says Iranian foreign minister Hossein Amir-Abdollahian. AP
Iran’s intervention also came as major freight companies warned that the Red Sea attacks could lead to shortages of vessels within weeks, as fleets become tied up taking the longer route around Africa – with a knock-on effect on prices that could kindle inflation.
Mr Amir-Abdollahian said Iran did not want to escalate the instability in the Red Sea, where Tehran-backed Houthis have been attacking cargo vessels, prompting US-led retaliatory strikes on sites in Yemen.
But speaking to an audience at the World Economic Forum in Davos, he said the Houthis had been responding to attacks on them, and their action was also motivated by Israel’s military campaign in Gaza.
He said the Red Sea was “now tied to events in Gaza” and it would be “to all our detriment” if the attacks on the Palestinian enclave did not stop.
“If the genocide in Gaza stops, it will lead to the end of other attacks and crises in the region,” he said.
He said Tehran had warned that this would happen, but this “does not mean we want to play a role in the enlargement [of the conflict], no, it is because we have a proper understanding of the region”.
“We do care about maritime security and shipping safety. Our oil exports are done by sea,” he said. “The security of the region is our own security.”
The US military fired another wave of missile strikes against Houthi sites on Wednesday, multiple US officials said, marking the fourth time in days it has directly targeted the group in Yemen. US Secretary of State Antony Blinken said the US also plans to designate the Houthis as a global terrorist group.
Meanwhile, business leaders lined up to express concern about the looming likelihood that the Red Sea instability will start to disrupt supply chains and drive up costs.
“This is extremely disruptive because you have close to 20 per cent of global trade that transits through the Bab al-Mandab Strait to the Red Sea],” said Vincent Clerc, CEO of the shipping giant Maersk.
“It’s one of the most important arteries of global trade and global supply chains, and it’s clogged up right now,” he told Reuters Global Markets Forum in Davos.
Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending them on a longer route around Africa or pausing until the safety of vessels can be assured.
Freight rates have more than doubled since early December, according to maritime consultancy Drewry’s world container index, while insurance sources have told Reuters that war risk premiums for shipments through the Red Sea are also rising.
The alternative shipping route around South Africa’s Cape of Good Hope can add 10 to 14 days to a journey versus travelling via the Red Sea to the Suez Canal.
DHL Group boss Tobias Meyer told a Davos panel that a shortage of container ships could start before the end of the month, with particular impact on Asia.
“The back-flow is currently not happening at the pace people were planning for, so that’s something to monitor,” he said.
Amin Nasser, CEO of Saudi oil giant Aramco, told Reuters in an interview that tankers would be available in the short term, “but if it’s longer term, it might be a problem”.
At Davos, Mr Amir-Abdollahian was accused of hypocrisy for justifying Tehran’s attacks on terrorist groups in third countries while criticising Israel for doing the same. He rejected this, saying Hamas was “a Palestinian liberation movement” not a terrorist group.
He said he had notified Pakistan’s foreign minister beforehand of the missile and drone salvo against separatist Sunni terrorist group Jaish al-Adl in Pakistan’s Balochestan Province on Tuesday (Wednesday AEDT).
But Islamabad has responded by recalling its ambassador to Iran and barring Tehran’s envoy from re-entering the country over the “unprovoked and blatant breach” of its sovereignty. It said the strike killed two children and injured three others.
Mr Amir-Abdollahian was unapologetic: “We don’t allow national security to be compromised or played with, and we have no reservations, no hesitations when it comes to our national interests.”
But the attack is only likely to inflame regional tensions, which were already roused by an Iranian hit on an alleged Israeli spy base in Iraqi Kurdistan. Mr Amir-Abdollahian said his government would “respond vigorously” to any Israel attack.
Iran also this week fired missiles at ISIS targets in Syria following a lethal attack claimed by the terrorist group earlier this month.
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