Shell Plays It Safe, Pauses Red Sea Shipments

Posted by John Donovan 16 Jan 24

In a move that’s less ‘brave explorer’ and more ‘cautious cat’, Shell, the British oil giant, has reportedly paused its Red Sea fiesta, halting all shipments through this aquatic party zone. Why? Because the Houthi rebels from Yemen have decided to be uninvited party crashers, targeting commercial vessels on this crucial global trade route.

The Wall Street Journal spilt the tea first, citing those ever-mysterious ‘unnamed sources’. When FOX Business tried to get the lowdown from Shell’s office for the Americas, they were met with radio silence. And, in true secretive fashion, the Journal says Shell declined to comment. Talk about playing hard to get!

But wait, there’s more! Shell isn’t the only one ducking for cover. BP already hit the brakes on their Red Sea escapades last week, and Qatar Energy joined the club this week, putting their liquefied-natural-gas exports on hold.

It seems Shell’s decision came after their chartered oil tanker, moonlighting as a jet fuel chauffeur out of India, had a close encounter in December. According to shipping officials, the tanker faced drone harassment and some unwelcome attention from Houthi boats. Talk about a rough day at sea!

BP, another UK-based oil biggie, had already taken a rain check on Red Sea shipments, citing the “deteriorating security situation” as their party pooper. And who can blame them? The area’s turning into a hotspot for Houthi rebel attacks on vessels.

With tensions in the Middle East escalating faster than a Hollywood drama, and the U.S. and UK throwing punches at Houthi targets in Yemen, the biggest names in shipping and tankers are advising a wide berth from the Bab el-Mandeb Strait. Shippers, in a collective ‘nope’, are rerouting away from the Red Sea.

This past weekend, things got even spicier. A Houthi-fired anti-ship cruise missile aimed at the USS Laboon in the Southern Red Sea got a taste of U.S. fighter aircraft, with no injuries or damage reported. And then, the Houthis went all in, striking the Gibraltar Eagle, a U.S.-owned merchant vessel. Fortunately, the ship shrugged it off and continued on its merry way.

But the Houthis aren’t done yet. They’ve now declared all U.S. ships in the Red Sea as fair game, following the U.S. and UK’s missile strikes in Yemen.

Over at the World Economic Forum in Davos, a DP World exec was doom and gloom, predicting that this whole Houthi hullabaloo will hit Europeans in the wallet, driving up the prices of consumer goods.

Since November, these Iranian-backed Houthi rebels have been lobbing missiles and drones at commercial vessels, with a special shoutout to Shell’s tanker that was just trying to deliver some Indian jet fuel last month.

The Journal points out that a whopping 12% of the world‘s seaborne oil trade sashays through the Red Sea. So, with Shell and co. hitting the brakes, it’s like having a major highway suddenly closed for repairs. The result? A logistical headache and possibly pricier goods for everyone.

In this high-stakes game of maritime tag, Shell’s playing it safe. Better to skip the party than to dance with the Houthis, right? But let’s not forget the real drama here: the ongoing saga of navigating these turbulent waters, where oil giants, rebels, and international politics mix as well as oil and water. Stay tuned for the next episode of ‘As the Red Sea Turns’!