The world's two largest shipping canals are facing delays and problems, threatening to snarl commodities shipping and push prices higher.
Ships crossing through the Panama Canal have faced delays this year because of drought that has sent the canal's water levels to record lows.
HOUSE GOP GRIPES OVER SPEAKER MIKE JOHNSON'S DECISION TO PUNT LEGISLATION INTO 'DISASTROUS' 2024
Now the world's other most significant canal for international trade, the Suez Canal, is becoming difficult to access. Major shipping companies have said in recent days that they will reroute from the Suez Canal to travel around Africa instead to avoid passing through the Bab el Mandeb Strait because of missiles fired at ships by Iranian-backed Houthi militants in Yemen.
BP and Norway's Equinor became the latest companies to pause or reroute operations in the Red Sea on Monday, with BP citing the “deteriorating security situation” and attacks on commercial vessels headed toward the Suez Canal.
"The safety and security of our people and those working on our behalf is BP's priority," the company said.
That announcement comes after similar announcements from shipping giants MSC, CMA, Hapag-Lloyd, and Maersk, the world’s largest shipping company, which took steps either to pause or reroute their shipments away from the Suez Canal, which links Europe to Asia and is a key port for grain and commodities shipments.
Defense Secretary Lloyd Austin said during a visit to Israel on Monday that the attacks are "reckless, dangerous," and in violation of international law.
Speaking at a press conference, Austin said the United States is helping build "an international coalition" to help address the threat and will meet Tuesday with regional ministers "to ensure freedom of navigation in the area.”
U.S. military officials said Saturday that they had shot down 14 drones in the Red Sea, all of which had been launched from Houthi-controlled areas of Yemen.
The Suez is responsible for 12% of global seaborne trade, including a large portion of oil and LNG shipments, meaning that any prolonged disturbance could have a profound impact on prices and supplies.
The journey around the Cape of Good Hope in Africa is roughly 3,000 miles longer than the Red Sea route.
Vessels that are rerouting around the tip of Africa can expect an increase in transit time of between seven to 10 days, according to a report from the freight platform Flexport.
These expected reroutes, if sustained, could have "some fairly seismic activity in terms of the implications for supply chains," Richard Meade, the editor of the Lloyd’s List shipping journal, told CNBC in an interview Monday.
The Suez is especially critical for global oil and LNG trade.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The announcements have affected markets, with futures for international benchmark Brent crude rising by 3.9% as of mid-Monday.
Futures for U.S.-based West Texas Intermediate, meanwhile, increased by as much as 4% to the highest point in two weeks.