Frame from a Houthi video of the seizure of the lead cargo ship Galaxy in the Red Sea, November 2023.
Photo: REUTERS
Oil becomes more expensive and the ruble strengthens: this formula has worked perfectly for decades. Thus, in the middle of winter, the dollar and the euro strengthened significantly. On January 15, both fell below their November positions: the euro on the Moscow Stock Exchange became cheaper than 96 rubles, the dollar fell to 87 rubles and 40 kopecks. The reason is the increase in oil prices by 5 to 7 percent (up to $80 per barrel) in the context of the conflict in Yemen and the increasing danger of transporting goods through the Red Sea.
Why has this sea become so dangerous? Let us remind you that everything is to blame for the tricks of the Yemeni Houthis, a military organization and not at all friendly, to put it mildly, to Israel and its allies. When Israel launched a military operation in Gaza late last year, the Houthis, who were entrenched just along the Red Sea coast, launched missile attacks against merchant ships from countries friendly to Israel. That is, mainly on ships from the United States and England. In response, the Americans and British have been launching missile attacks on Yemeni Houthi bases since January 12. But they turned out to be ready for war and, despite the attacks, continue to shoot at the ships of Israel’s friends in the Red Sea.
On January 13, a Russian oil tanker flying the Panamanian flag was nearly attacked by the Houthis. The rocket fell half a kilometer from the ship and no one was injured. After this, Yemen promised not to attack Russian and Chinese ships. However, many of our ships, not wanting to take risks, are already sailing around Africa.
WHAT DOES THIS AFFECT?
About the prices. First of all, as stated above, oil.
– The problem of the Middle East and its conflicts largely revolves around the transportation of oil. It is the most “sensitive” product transported there,” says Georgiy Ostapkovich, director of the Market Research Center of the Institute of Statistical Research and Knowledge Economy of the Higher School of Economics. – And for Russia this situation is beneficial, because oil prices are rising. This means that we do not lose, but rather gain additional income to the budget.
The Houthis have already promised not to attack Russian and Chinese ships. And yet, many of our ships, not wanting to take risks, are already sailing around Africa.
Photo: REUTERS
However, not everything is so rosy.
“A decent amount of Russian oil is exported from the ports of the Leningrad region and Novorossiysk (from the latter, by the way, Kazakh fuel also reaches buyers”), explains Alexey Zubets, director of the Russian Socio-Economic Research Institute. . the Financial University under the Government of the Russian Federation. – From the Leningrad region, oil passes through the Baltic to the Mediterranean Sea, then through the Red Sea to India and other countries. This is one of our main roads, so the tense situation on the Red Sea increases the influence on the supply (length and schedule of the route – Ed.) of our products to world markets. In addition, insurers increase the cost of their services due to the risks.
INFLATION WILL INCREASE IN EUROPE
Due to the Houthi attacks, global markets are even more turbulent than Russian markets. According to the Dutch banking group ING, more than 20 million barrels of oil pass through this pipeline every day, representing approximately 20% of world consumption.
“They also transport various consumer goods from Europe to Asia (mainly China) and vice versa,” adds Alexey Zubets. – In total, between 12% and 13% of the volume of international trade passes through the Red Sea. And if the Suez Canal fails, this significantly complicates communications and causes an increase in the cost of all goods transported there. Hence the increase in inflation. This time it may increase in Europe by between 1 and 2%.
In total, between 12% and 13% of international trade volume passes through the Red Sea.
Photo: GLOBAL LOOK PRESS
AVOIDING IS NOT SO COSTLY
This is stated by Georgiy Vlastopulo, Senior Partner at Optimalog.
“There is an opinion that if ships are sent through the Cape of Good Hope (that is, through South Africa, skirting all of Africa – Ed.), the costs of maintaining crew and fuel increase,” says the expert on the air of Komsomolskaya Pravda radio. – On the one hand, this is true. But, on the other hand, in terms of costs it is almost equivalent to passing through the Suez Canal, because the ships pay 10% of the rent to Egypt for the transit. And this rent is equivalent to avoidance costs. But in addition to the costs, there are the delivery times, which when traveling through Africa increase on average from 7 to 15 days. And this is very significant. However, to reduce the risks, any company, including the Russian one (despite the Houthis’ statements not to touch our ships), will opt for an alternative solution. We already see that traffic through the Suez Canal has fallen, according to various estimates, from 40 to 80%. And the number of ships sailing has multiplied by 2.5.
Ships carrying tea from India, Sri Lanka and Kenya are circumnavigating Africa. These are our main suppliers. Does this mean that the tea on the shelves will be more expensive?
“Not in the near future,” says the head of the Roschaykofe Association, Ramaz Chanturia, on Komsomolskaya Pravda radio. “The situation, of course, is a cause for concern. But last year, when sanctions were introduced, it was a worse time. Then delivery, instead of the standard 40 days, increased to 90. And this did not affect prices much. Therefore, there is nothing critical now, but it is necessary to be aware.
