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Tanker shipping is a key feature in the global economy, as some 2 billion barrels are carried annually by such ships all over the world. Tankers have a huge impact on the supply of oil and gas to European markets, which are obviously affected by the rising instability in the Red Sea. As EU Trade Commissioner Valdis Dombrovskis already stated, disruptions caused by the regional crisis pose a risk for the economic outlook of the European Union as well as the supply and prices of energy.
“We see already that there are disruptions to the shipping routes concerning the Red Sea and, correspondingly, the use of the Suez Canal,” Dombrovskis said two weeks ago, a few days after the United States and the United Kingdom launched the first attack against the Houthi rebels in Yemen. The situation has not changed recently, as the tension continues to grow and many vessels, also carrying EU member states’ flags, became the target of missiles by the Houthis.
Apart from the general economic threats linked to such a crisis, the EU fears that energy prices could slowly rise due to the instability’s impact on sea trade, insurance fees, and longer routes. We have to remember that the Red Sea and the Suez Canal are the fastest routes from the Middle East energy producers to the European markets, saving ships almost a month of journey time compared to the alternative detour around the Cape of Good Hope in South Africa.
After almost two years of war in Ukraine, a conflict that had a catastrophic impact on the EU energy markets, especially in the first months, European governments are way more anxious when it comes to any threat to energy security and the reliability of energy supplies. This also explains why the EU countries decided to launch a new naval mission in the Red Sea in order to preserve and secure the ships transiting in the area. Containing the negative effects of the regional crisis in the Middle East is a priority in order to avoid a potential return of skyrocketing bills for households in Europe.
Written by: Francesco Marino