The US gives the Houthis an ultimatum as Red Sea attacks intensify and further disrupt global shipping

Rattling markets… Oil prices have spiked and shipping costs have soared following numerous Houthi attacks on commercial ships in the Red Sea. On Wednesday, the US, UK, and other allies issued a “final warning” to the Yemeni rebel group: stop attacking ships or else. Yet just yesterday the Houthis launched another attack. Some background: the Houthis overthrew Yemen’s government in 2014, which led neighboring Saudi Arabia and other Arab countries to launch a campaign against the Iran-backed militants.

• How it started: The Houthis began launching missiles and drones toward Israel after Hamas’ October 7 attacks on the country. After the Houthis’ weapons were intercepted, they started targeting vessels in the Red Sea, which the Pentagon says have not all been linked to Israel.

• So far: The US says the Houthis have attacked commercial ships 25 times since mid-November. Last week, US helicopters sank three Houthi ships to repel an attack on a Maersk container vessel.

• Why it matters: About 15% of the world’s seaborne trade normally passes through the Red Sea, including 8% of the world’s liquefied natural gas trade.

Economic fallout… The Houthi attacks have led to ballooning shipping costs. That’s because several of the biggest shipping firms — including Maersk and Mediterranean Shipping Co. — have halted Red Sea shipping. Now, instead of cruising through the Red Sea and taking the Suez Canal shortcut that connects Europe to Asia, they have to sail around the southern tip of Africa (a much longer route). The effects by the #s:

• Up ~3X: Spot container shipping rates from Asia to Northern Europe have nearly tripled. Rates from Asia to America’s East Coast are up 55%.

• Down ~30%: Traffic in the Suez, a critical gateway between the East and West, has fallen 28% in the past 10 days.