It’s never over until it’s over!

Oil prices in Canada may jump again soon because of Red Sea attacks

Canadians should brace up for higher pump prices. Inflation and oil prices in Canada and around the world may jump again soon with the escalation of Red Sea attacks on oil tanks and shipping vessels.

The US-led force in the Red Sea has shot down 19 drones and missiles launched by the Iranian-backed Houthis in Yemen in less than a month, but there’s no sign that the militants are backing off, the commander of US Navy forces in the Middle East said.

More than 1,500 international merchant ships have passed safely through the Red Sea since a coalition task force started operations on Dec. 18, Vice Admiral Brad Cooper said Thursday. Cooper said the coalition is employing a “zone defense,” with five vessels seeking to protect all ships in the waterway as opposed to providing individual escorts to a few. He said the task force is taking an active role, “manoeuvring and communicating at sea.”

Cooper’s acknowledgement that the Houthi attacks aren’t abating comes as the US and allies are giving increasingly stern warnings of more aggressive action.

On Wednesday, more than a dozen nations led by the US issued a statement warning that the Houthis “will bear the responsibility of the consequences should they continue to threaten lives, the global economy and free flow of commerce in the region’s critical waterways.”

A UK official said Thursday that allied action against the Houthis in Yemen, where they are based, is likely if they don’t heed that warning. The official said the Biden administration has raised that possibility. The UK has indicated it would favor relatively small tactical operations to degrade Houthi capabilities, the official said.

Attacks in Yemen would add to multiple risks that the war between Israel and Hamas will expand into a broader regional conflict.

Cooper’s briefing was the first detailed public account by a US military official on the operation that’s intended to protect shipping in the Red Sea, which normally handles about 12% of the world’s commerce.

A number of major shipping operators have said they are taking a lengthier and costlier route around the southern tip of Africa to avoid the Houthi threat.

That’s driving up short-term rates for container shipping. The spot rate for shipping goods in a 40-foot container from Asia to northern Europe now tops $4,000, a 173% jump from just before the diversions started in mid-December, Freightos.com, a cargo booking and payment platform, said late Wednesday.

Reference

Bloomberg

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