Major shipping companies have decided to halt their vessels from traversing the Red Sea near Yemen due to the Houthi faction’s attacks using drones and missiles. This disruption forces ships traveling between Europe and East Asia to either take a longer route around Africa or use the Suez Canal, adding significant time and miles to their journeys. While 12% of global trade uses the Red Sea route, its closure might impact Europe and Asia more than the U.S. Mark Hopkins from Moody’s Analytics states that the shipping disruptions are unlikely to significantly affect the U.S. economy or consumer prices. Although oil prices have risen due to the disruptions, U.S. gas prices for consumers are expected to remain relatively stable. However, prolonged conflicts in the region could destabilize the global economy. With the U.S. military already involved in the Middle East, there’s potential for further escalation. These disruptions highlight the vulnerabilities in global supply chains, potentially pushing businesses to diversify their sources to mitigate risks.

Inspired by: https://www.freightwaves.com/?s=red+sea+impacts