The Houthi group’s detention of a cargo ship in the Red Sea has raised fears of a rise in oil prices as markets open, and the cost of insurance for marine shipping, in a vital region for global trade, according to Al-Sharq/Bloomberg.
Yesterday, Sunday, the Houthi group threatened that it would target all ships that fly the Israeli flag or ships operated by Israeli companies, or owned by Israeli companies, in response to the Israeli aggression on the Gaza Strip.
Hours after the threat, the group announced that it had captured an Israeli ship and taken it to Yemeni territorial waters, and said it was conducting an investigation with the crew.
For its part, “Israel” said that the detained ship is owned by the British and managed by the Japanese in the southern Red Sea, and that there are no Israelis on board.
In statements to Al-Sharq/Bloomberg, Andrei Kovatario, co-founder of the research company ECERA, expected oil prices to rise by several dollars when markets opened in Asia, warning that the size of the increase would be linked to the consequences of the accident.
He added that any disruption of this kind, especially during a period of heightened geopolitical risks, could send a bullish signal to markets.
He expected that the rise in prices would be directly related to how things would develop in the coming hours, and he believed that if this was the beginning of an escalation, we would see a big jump in prices.
Covatario also considered that the region will witness an increase in marine shipping insurance rates, especially for oil shipments that pass through these regions.
Although the Houthi group in Yemen was the one that seized the ship, “Israel” quickly accused Iran, and the occupation prime minister Benjamin Netanyahu, in a statement, considered the incident “an escalation of Iran’s aggression” and had “international consequences”. on the security of global shipping lanes,” which is what has increased fears of further developments.
Bloomberg Economics conducted a study on the impact of the conflict in the Middle East on global growth and inflation under three scenarios.
Under the first case, hostilities would remain largely limited to Gaza and Israel. Regarding the second case, it assumes the expansion of the conflict to neighboring countries such as Lebanon and Syria, which include powerful armed groups supported by Tehran. Which basically makes it a proxy war between “Israel” and Iran. The third possibility involves direct escalation between these two regional enemies.
In the most severe scenario, oil prices could jump to $150 per barrel, and global growth could drop to 1.7%, which could deduct about a trillion dollars from global economic output.