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Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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Houthi Red Sea Attacks Are Boon for Pirates as Ships Reroute

  • The Red Sea shipping crisis has forced ship operators to re-route.
  • Unfortunately, resurging attacks coming from notorious piracy hotspots have shipping companies worried about the new route.
  • It’s unlikely that surging piracy on African waters will persuade shipping companies to return to the Red Sea any time soon due to the even higher risk of facing Houthi attacks
Pirate

Since November, Yemen's Houthi rebels have repeatedly attacked cargo ships passing through the strait of Bab al-Mandab that splits north-east Africa from Yemen on the Arabian Peninsula. The Iran-backed rebels have been targeting vessels with connections to Israel and Western countries, forcing dozens of shipping companies to take a 4,000-mile detour around the continent of Africa at significantly higher costs and extra shipping days.

Unfortunately, resurging attacks coming from notorious piracy hotspots have shipping companies worried about the new route. Arsenio Dominguez, secretary-general of the International Maritime Organization, has warned shipping companies to be on high alert for piracy after vessel seizures in the Gulf of Guinea and off the Somali coast. 

Dominguez has urged companies to return to the stringent security levels of the previous piracy crisis, “They need to be more in line with how they were back in 2008 to 2012 off Somalia. We’re having conversations to create awareness surrounding the Gulf of Guinea . . .  with the increased traffic in the region, we should avoid new escalation or increased incidents of piracy,’’ he said. 

One vessel hijacked in December remains off the Somali coast, while pirates briefly seized another bulk carrier the following month before it was freed by the Indian navy. 

On Friday, Houthi rebels attacked and set ablaze a cargo ship traveling through the Gulf of Aden. Last month, a tanker’s crew was kidnapped off Equatorial Guinea by pirates. On February 19, the crew of a dry bulk carrier sailing on Somali waters was forced to abandon ship after a missile attack. The ship’s Beirut-based owner says the vessel was listing and in danger of sinking. However, the shipping company is working with a salvage company to have the ship towed to Djibouti.  Related: Red Sea Chaos To Have Limited Effect On LNG Prices

The Gulf of Guinea and Somalia’s Gulf of Aden were once considered some of the most dangerous piracy zones for oil companies and other seafarers with a wave of piracy peaking in 2018. What makes these places particularly vulnerable is a lack of sufficient equipment and manpower as well as the fact that attacks are mainly staged far off coastlines beyond countries' territorial jurisdictions. Further, the Gulf of Guinea is rich in oil and gas as well as a relatively well-trained militia that has honed its skills fighting in the Delta's secessionist movement. In the past, pirates operating in the Gulf of Guinea have targeted human capital instead of hijacking ships. 

The Gulf of Mexico remains another piracy blackspot due to its abundant oil and gas resources, although pirates there are mostly associated with local crime groups rather than cartels and prefer stealing valuable equipment and materials instead of targeting tankers and larger vessels.

Thankfully, the African menace was largely eliminated by the adoption of on-board security measures, including traveling with armed guards. Some coastal states have also adopted more rigorous anti-piracy action. 

Western, Israeli-Linked Ships Paying 50% Extra Insurance Premiums

It’s unlikely that surging piracy on African waters will persuade shipping companies to return to the Red Sea any time soon due to the even higher risk of facing Houthi attacks coupled with exorbitant insurance premiums being levied on ships plying the Red Sea. Underwriters have started charging ships linked to U.S, British and Israeli companies as much as 50% extra in war risk premiums to navigate the Red Sea due to the persistent threat of attacks. The war risk premiums for Red Sea voyages now hover at ~1% of the value of a ship, up from around 0.7% previously, with additional costs translating into hundreds of thousands of dollars for a seven-day voyage.

“The ships that have so far had problems, almost all of them have some element of Israeli or U.S. or U.K. ownership in there somewhere,” Marcus Baker, global head of marine and cargo with Marsh, has told Business Insurance. 

The Yemeni rebels have been relentless with attacks on commercial ships despite counterstrikes by the U.S. and British navies, and have vowed to continue doing so. “The Houthis persist in upholding their religious, moral, and humanitarian duties towards the Palestinian people and in defense of their beloved Yemen in the face of American-British aggression. Military operations will not stop unless the aggression stops and the siege on the Palestinian people in the Gaza Strip is lifted,’’ Houthi Brig. Gen. Yahya Saree said in a pre-recorded statement on Thursday.

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By Alex Kimani for Oilprice.com

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