"Red Alert": Deutsche Bank Warns Clients About "Tension In Global Supply Chain" Amid Red Sea Crisis

Since mid-November, attacks by Iran-backed Houthi rebels from Yemen on commercial vessels in the Red Sea have disrupted a major shipping route responsible for about 12% of global trade. These actions highlight the vulnerability of the world's most complex supply chains. 

The Red Sea crisis escalated this week after a drone attack killed three US troops in Jordan, with the US attributing the incident to militias backed by Iran. Houthis are also aligned with the Palestinian group Hamas and have attacked over 30 vessels in the Bab el-Mandeb strait at the southern end of the Red Sea, initially focusing on ships with ties to Israel but later expanding attacks to US and UK ships. This has forced the world's largest shipping companies to divert vessels around Africa's Cape of Good Hope, significantly lengthening transport time and costs. 

The ongoing crisis is reshaping global trade and supply chains. Last week, MUFG bank warned clients that "higher friction geopolitics" jeopardizes maritime chokepoints.