Reuters Events | Supply Chain & Logistics Business Intelligence

An attack on a tanker sailing through the Red Sea with an anti-shipping missile from rebel-controlled territory in Yemen is part of a wider conflict that is causing dilemmas for international shipping and may potentially herald a new era of risk

On Tuesday 12^th December the Norwegian-owned and flagged tanker STRINDA was sailing past the West Coast of Yemen after passing through one of the world’s most significant maritime pinch points, the Bab al-Mandab Strait, when it was suddenly rocked by an explosion. It soon became clear that the explosion was caused by an anti-ship missile launched from Yemeni territory.

Thankfully, there do not appear to be casualties as of the time of writing and the STRINDA was able to remain afloat and be escorted back to safety.

The Houthi rebel group, which currently controls a large swathe of territory in Yemen claimed responsibility, as it has done for several recent incidents in the Red Sea. This is concerning in and of itself, but there is a wider context of their increasingly sophisticated naval strike capabilities, which have now become a huge headache for global shipping and could become much worse.

An increasingly sophisticated arsenal

The Houthis originate from a political insurgency movement in Yemen, and have since gone from relatively obscurity to the most powerful force in the country following on from the Yemeni Revolution in 2011, which left the country without leadership and fractured.

More recently, they have become embroiled in the Hamas-Israel conflict as part of a wider anti-Israel coalition led by their ally, and long-time sponsor, Iran.

I've counted seven different types of anti-ship cruise missiles and six different types of anti-ship ballistic missiles ... I don't think a lot of countries have the same amount of types in their inventory

That has increasingly manifested itself in attacks on shipping in the seas around Yemen, supposedly targeting shipping related to Israel according to Houthi leaders.

While such a close ally to Iran acting in a hostile manner towards Israel or the West more generally is perhaps not surprising, the arsenal this non-state actor has assembled in such a short space of time is truly remarkable.

“I've counted seven different types of anti-ship cruise missiles and six different types of anti-ship ballistic missiles,” says Fabian Hinz, Research Fellow for Defence and Military Analysis at the International Institute for Strategic Studies (IISS), a London-based think tank that studies conflict. “That's a huge diversity of anti-ship missiles. I don't think a lot of countries have the same amount of types in their inventory,” he points out.

Not only this but Hinz, who has studied Houthi capabilities in this arena for some time, notes that they also have an inventory of naval mines and unmanned boats and aerial vehicles that allow them to both reconnoitre the Red Sea and conduct strikes.

Indeed, their usage of explosive-laden naval drones predates the more famous deployments that Ukraine has recently undertaken to strike at Russian shipping in the Black Sea, making the group a dangerous innovator.

Iran provides the power projection

“The Houthis are showing us what they have in their stock quite openly,” says Hinz and it is clear that this is a “massive influx of Iranian technology.”

The Iranians seem to have been become very good at transporting stuff to Yemen

This inbound technology arrives and is produced by various routes. There “seems to [be] some sort of local production effort that has been enabled with Iranian help” for “simpler, short-range systems,” points out Hinz. However, “when you talk about the really advanced anti-shipping capabilities, both anti-ship cruise missiles and anti-ship ballistic missiles, these are coming from Iran.”

They have historically been smuggled in through smaller vessels that can slip by the considerable international naval presence in the area. “The Iranians seem to have been become very good at transporting stuff to Yemen” says Hinz, “but there were also some people speculating whether large freighters might have entered the Houthi areas unchecked and uncontrolled.”

If this is the case then Houthi stockpiles might be considerable, leaving the main questions now “what do they want to target, would they be willing to expand their list of targets to ships not really related to Israel and how many effectors do they have?” says Hinz.

“The perfect place to escalate”

The risks for shipping passing through the region are now rising rapidly as a result of this armoury gathered by the Houthis and their displays of willingness to utilise them.

This is enhanced by the geography at the tip of the Arabian Peninsula and the sheer volumes of trade that passes through the area.

At its narrowest, the Bab al-Mandab strait is just 18-miles wide and the entire Red Sea is a pinch point for global shipping.

This means that Houthis can combine various resources to understand what shipping is in the area with relative ease, including surveillance drones, civilian vessels, Iranian capabilities, shore-based radar and even open-source tools like maritime Automatic Identification System (AIS) trackers explains Hinz.

Combine that with the critical goods passing through each day and “it's the perfect place to escalate” he comments.

The Energy Information Administration estimates that 12% of total seaborne-traded oil and 8% of LNG transited via the strait in the first half of 2023.

It is pure luck no seafarers have been killed yet

The Suez Canal, and therefore the strait, is estimated to account for a similar 12% of global container trade alongside this critical movement of hydrocarbons.

That vulnerability means that if attacks are stepped up it could have substantial ramifications, although at this stage only a small number of ships have been seen redirecting.

“The safety implications to international shipping are considerable and very concerning," Jakob Larsen, head of safety and security at shipping association BIMCO, told Reuters. "It is pure luck no seafarers have been killed yet."

A premium to sail

There has been a reaction from insurance markets as a result of the multiple attacks, causing rising costs for those transiting the Red Sea.

Reuters reported that war risk premiums rose to 0.05% to 0.1% of the value of a ship from around 0.03% in the immediate aftermath of a Houthis boarding and hijacking of a car carrier, the Galaxy Leader, on 19^th November 2023.

These rates then moved upwards again as more attacks were reported, pushing up to 0.07% of the value of a ship in early December and then to 0.1%-0.15% to 0.2% of the value of a ship by mid-December.

This typically means that transiting the region is costing tens of thousands of additional dollars for cargo-carrying vessels and could add up to hundreds of millions for the industry if the situation remains similarly tense or worsens.

While it is impossible to predict exactly what future attacks may happen, if any, it does appear that this is a pressure point that Iran and its Houthi allies want to continue to press and that there is serious risk of escalation, especially given that the links to Israel have been tenuous at best for several of the vessels attacked.   

Other countries are not giving 1,600-kilometre range missiles to non-state actors 

A warning of things to come?

Concerningly though, this may be a forewarning of an increasing vulnerability in the global trade system, as the ability to strike shipping comes down in cost and complexity.

While this could be seen as “just a very unique set of circumstances and Iran is doing very unique things, [as in] other countries are not giving 1,600-kilometre range missiles to non-state actors,” believes Hinz, the better way of seeing it is that uniqueness is turbocharging development and “is why we're seeing trends earlier than elsewhere.”

“There are so many things we saw in Yemen for the first time,” points out Hinz, such as the use of suicide drones being used as “strategic, long-range direct attack munitions.”

I would say it's basically a sign of a global proliferation of technology

It is therefore something like a combat laboratory, where the first deployments of suicide drone boats or long-range first-person view drone strikes are initially seen and then become more widespread, as we can now see in Ukraine.

“I would say it's basically a sign of a global proliferation of technology,” he summarises, especially in this context. Neither Yemen, nor their main supplier Iran, would be considered wealthy countries, with both under sanctions regimes. Despite that, they now have the capacity to threaten a major trade lane with multiple different delivery systems, and a non-state actor now has an arsenal as varied as what would once be the preserve of a mid-size nation.

It therefore would be wise for those involved in the maritime space, whether private or governmental, to pay close attention to what this once obscure group are doing and how they are doing it.