Israel’s “Iron Sword” military operation aimed at liquidating Hamas in Gaza after the murderous infiltration into Israeli territory has opened a Pandora’s box of Iran’s proxy network across the Middle East and beyond. The war is no longer an isolated geopolitical quagmire focused on the Holy Land since the Muslim world’s ideological feuds between the Shiites and Sunnis are all-in with pan-Islamic support for the Palestinian cause that transformed into a humanitarian crisis and is viewed as genocide by the Muslim world.

Erdogan Chides Blinken for Comments in Israel About His Jewish Heritage… “Turkish President Recep Tayyip Erdogan on Friday criticized U.S. Secretary of State Antony Blinken’s approach to the latest Israel-Hamas war. Blinken said he’s not approaching Israel as a foreign secretary but rather as a Jew. ‘What kind of approach is this?… What if your counterpart tells you I’m approaching the region as a Muslim? How would you answer? Whether Jewish or Turkish or anything else, we don’t care. You should approach everyone as human.’” – VINews, Oct. 13

Turkey’s Erdogan: It’s “Muslim blood” Being Spilled – Global News, Oct. 26

A Turk in Palestine… “Erdogan’s legitimacy, after all, is based on the civilizational clash, so he pulls it closer at every opportunity. Here’s Erdoğan at the Great Palestine Rally: ‘You shed tears for those who died in Ukraine, but why are you silent for those who died in Gaza? O [Western countries], I am calling out to you! Do you once again want a struggle between the crescent and the cross?’” – Selim Koru, Dec. 4

 

Iran, Hamas, and Islamic Jihad: A marriage of convenience… “Iran may not be directly behind the 7 October attacks on Israel, but Tehran has long worked to strengthen groups such as Hamas and Palestinian Islamic Jihad. The broader dynamics within the Middle East have, in turn, limited these groups’ choices… A group’s Islamic credentials (or lack thereof) matter less than its willingness to confront Israel. As a result, for many decades Iran, a self-styled Islamic Shia republic, has supported a plethora of secular, leftist, and Sunni Islamist groups.” – ECFR, Dec. 18

Since penning “Revisited” (Twitter thread) and “Reckoning” (thread) in early October for this series, the war escalated into northern Israel with Hezbollah’s stronghold in southern Lebanon, numerous attacks on U.S. military bases, and diplomatic missions across the Middle East by Iran’s proxies and the IRGC. More significant are the Houthis (aka Ansar Allah) in western Yemen who declared themselves part of the “axis of resistance” of Iran-affiliated groups. They have singlehandedly disrupted international shipping and global supply chains by attacking vessels or taking those container ships and oil tankers as hostage while passing through and/or exiting the Bab-el-Mandeb Strait (aka the Gate of Tears) via the Gulf of Aden or the Red Sea and Suez Canal. The last time a significant geopolitical powder keg or kinetic threat occurred in that strategic waterway was during the Saudi Arabia-Yemen war in 2018 when I published “Oil Supertankers Attacked by Iranian Proxies in the Strategic Bab-el-Mandeb Strait” (thread).

To grasp the magnitude of attacks on U.S. military bases, and recent naval deployments in the Middle East region (excluding NATO in the Mediterranean) and near Yemen by the collective West since early October, here are two maps:

Graphic Courtesy of @FinanceLancelot

Attacks on U.S. Bases in Middle East – ISW, Dec. 16, 2023

The WSJ published an editorial piece this week that describes Yemen’s military efforts in support of Gaza as creating “the most significant threat to global shipping in decades.” Numerous shipping industry behemoths have been forced to suspend journeys, mask maritime positions, or reroute their fleets from the Red Sea and Suez Canal to the Cape of Good Hope route around the southern tip of Africa.

Israel keeps pounding Gaza, Houthis vow more Red Sea attacks… “The conflict has spread beyond Hamas-ruled Gaza, including into the Red Sea where Iran-aligned Houthi forces have been attacking vessels with missiles and drones… ‘Our position will not change in the direction of the Palestinian issue, whether a naval alliance is established or not… Our position in support of Palestine and the Gaza Strip will remain until the end of the siege, the entry of food and medicine, and our support for the oppressed Palestinian people will remain continuous.’” – Reuters, Dec. 18

Rerouting Map Via Southern Tip of Africa – Reuters

The situation has gone beyond an acceptable risk of doing business and concerns over the welfare and security of seafarers. Major shippers including Hapag-Lloyd, MSC, Maersk, Evergreen, and energy transports by BP, Euronav, and Frontline have already begun to reroute vessels or postpone shipments. Whether risking passage through the Red Sea or choosing to sail around Africa, either route leads to an increased demand for freight capacity, higher rates for transporting cargo, and higher insurance costs. London’s marine insurance market widened the area it deemed high-risk and added to the premiums ships must pay. Lloyd’s List practically demanded that Navies must act to ensure trade flows in the Red Sea as a “legitimate use of gunboat diplomacy.”

Not only is the situation an inflation signal and a threat to the availability of consumer goods worldwide, but the attacks pose a threat to energy security that relies heavily on global supply chains. A decision to bypass the Suez Canal affects many countries, and in particular Egypt’s unprecedented economic problems will hit its economy harder because their Suez Canal transit fees provide $12 billion a year in revenue. It is estimated that 8% of LNG (natural gas), 12% of seaborne oil trade, and roughly 12-15% of world shipping traffic transits the Red Sea and Suez Canal and is the shortest route between Europe and Asia. About 30% of Israeli imports arrive through the Red Sea on container vessels that are booked two to three months in advance.

Red Sea crisis to affect consumers worldwide… “Analysis of more than 300 industrial categories and 6,000 products indicated that 14.8% of all Europe, Mena imports were shipped from Asia and the Gulf by sea, according to S&P Global Market Intelligence. That included 21.5% of refined oil and 13.1% of crude oil. Among industrial material imports, 24% of organic chemicals and 22.3% of flat-rolled steel destined for Europe and the Mena region were shipped from Asia and the Gulf… Considering that around 12% of global trade goes through the Suez Canal, and the deviation around Africa adds between six to 14 days to shipments, the Red Sea disruptions delay the shipment of goods but also increase the price of shipping the goods.” – The National News, Dec. 19

A multinational naval force that formed off the coast of Yemen is being coordinated by U.S. Secretary of Defense Lloyd Austin to launch “Operation Prosperity Guardian.”

HOUTHI OFFICIAL TO AL JAZEERA: “WE WILL BE ABLE TO CONFRONT ANY POSSIBLE COALITION THAT COULD BE FORMED BY THE US IN THE RED SEA.” – Dec. 18

 

Pentagon announces mission to counter attacks on commercial vessels in Red Sea… “The U.S. and a host of other nations are creating a new force to protect ships transiting the Red Sea that have come under attack by drones and ballistic missiles fired from Houthi-controlled areas of Yemen, Defense Secretary Lloyd Austin announced early Tuesday in Bahrain… The United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles, and Spain will join the U.S. in the new mission, Austin announced. Some of the countries will conduct joint patrols while others provide intelligence support. Several other countries have also agreed to be involved in the operation but prefer not to be publicly named… The mission will be coordinated by the already existing Combined Task Force 153, which was set up in April 2022 to improve maritime security in the Red Sea and Gulf of Aden.” – Politico, Dec. 18

Keep in mind that restrictions have been in place at the Panama Canal due to low water levels caused by a drought in Central America. Transits began to plunge, and larger container ships were turned away in November. Since numerous Asian/U.S. services are already being diverted from Panama to the Suez Canal, the situation for container lines “is looking particularly dire” for the global supply chain. The travel time between Shanghai and New York is 17% longer via the Suez and 37% longer via the Cape of Good Hope. The distance between Shanghai and the Netherlands is 32% longer via the Cape than the Suez.

The Israel-Hamas conflict is escalating beyond the Holy Land, and the situation developing in the Red Sea due to Yemen is another WW3 flashpoint. Iran is deemed the major player on this chessboard, and a military strike on Iran or western Yemen is a possibility. Cyberattacks are on the rise with Iran’s oil infrastructure being disabled by Israel-linked hackers who hit 70% of Iran’s gas stations, and Hezbollah was declared responsible for last month’s cyberattack against Ziv Medical Center in Safed, Israel.

Now is a good time to be sure your financial house is in order, keep your food pantry well-stocked, and attend to your collection of self-defense items that should be ready for any unrest that could impact the U.S. mainland going forward.

Major shipping companies suspend Red Sea routes – Fox News, Dec. 18

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TraderStef on Twitter, Gettr / Website: TraderStef.com

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