The Suez Canal, a vital artery for global trade, is facing a significant financial setback due to ongoing unrest in the Red Sea region. Egyptian President Abdel Fattah al-Sisi revealed on Monday that the canal is experiencing a monthly revenue decline of approximately $800 million, a direct consequence of reduced shipping activity.
The disruptions stem from persistent attacks on commercial vessels in the Red Sea, which began in November 2023. The assaults, primarily carried out by Iran-backed Houthi militants, are part of their declared support for Palestinians in Gaza amid the ongoing conflict with Israel. These attacks have forced shipping companies to reconsider their routes, with many opting for the longer and costlier journey around Africa’s Cape of Good Hope.
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The Suez Canal serves as the shortest maritime passage between Asia and Europe, typically handling around 15% of global maritime trade. However, the heightened security risks have led to a drastic decline in traffic, subsequently driving up shipping costs and straining Egypt’s economy. While the official statement from the Egyptian presidency did not explicitly attribute the decline to Houthi actions, President Sisi had previously estimated in December that the canal’s disruptions could result in a staggering $7 billion revenue loss for Egypt in 2024.
Adding to the tensions, the Houthi group recently declared its intent to resume targeting U.S. vessels in the Red Sea, following deadly American airstrikes in Yemen that reportedly claimed over 50 lives. The attack marked one of the most significant U.S. military actions in the region in recent years. Additionally, the Houthis have threatened renewed strikes on Israeli ships unless restrictions on humanitarian aid to Gaza are lifted.
As regional instability persists, Egypt faces mounting economic pressure, with the Suez Canal—one of its primary sources of foreign revenue—caught in the crossfire of geopolitical tensions. The situation remains fluid, and global trade stakeholders are closely monitoring developments, anticipating further shifts in maritime dynamics.
