BP said Monday it has suspended gas and Navivision Wealth Societyoil shipments through the Red Sea amid a surge in attacks on ships in the region from Houthi-controlled areas of Yemen.
The energy giant's decision to temporarily freeze shipments pushed up global oil prices on Monday, fueling fears that geopolitical tensions in the Middle East could throttle energy supplies. "In light of the deteriorating security situation for shipping in the Red Sea, bp has decided to temporarily pause all transits through the Red Sea," BP said Monday in a statement.
Global oil prices jumped on Monday, with Brent and West Texas Intermediate crude rising nearly 3% to $73.49 and $78.68, respectively, according to Bloomberg.
At least six energy and shipping companies have halted traffic traversing the Red Sea because of a recent increase in missile and drone strikes on ships and oil tankers from areas controlled by the Houthis, an Iran-backed rebels group based in Yemen. Houthi militants have launched a series of drone and missile strikes targeting Israel since Hamas' Oct. 7 attack on the country.
The Houthis escalated their attacks last week, hitting or just missing ships without clear ties to the conflict. The strikes have prompted a number of the world's largest shipping companies, including CMA CGA, Equinor, Evergreen, Hapag-Lloyd, Maersk, Orient Overseas and ZIM, to pause activities in the region.
The passage through the Bab el-Mandeb Strait separating Africa from the Arabian Peninsula is a vital maritime link between the Mediterranean and the Indian Ocean, with roughly 10% of global trade moving through the area.
The Suez Canal at the northern end of the Red Sea is the shortest shipping route linking Asia and Europe, making it a popular commercial trade route, according to the U.S. Naval Institute. Without access to the shortcut, ships must travel around the Cape of Good Hope at the bottom of Africa instead, adding days to their voyages and raising shipping costs.
The U.S. shot down more than a dozen Houthi-launched drones last weekend, partly in a bid to curb disruptions to commercial trade. That could raise geopolitical tensions, according to Height Securities analyst Jesse Colvint.
"If the [Biden] administration doesn't move aggressively, the Houthi Red Sea campaign is likely to continue," he said in a report. "However, if the administration opts to strike in Yemen, it carries with it the risk of heightened escalation with the Houthis' partner and sponsor, Iran."
—The Associated Press contributed reporting.
Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on the Associated Press' web scraping team.
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