Key Points
- Houthi rebels have stepped up attacks on ships in the Red Sea, a move they say is in solidarity with Palestinians.
- Multiple shipping companies have announced they will pause or reroute shipments.
- The United States has announced a new operation in the region to protect trade.
Despite news that more companies will pause shipments going through the Red Sea due to attacks by Yemen's , experts say the average Australian won’t see much of an effect on their wallets barring a major escalation.
"I don't think this is a really big deal," economist and professor John Quiggin of the University of Queensland told SBS News on Tuesday.
"People pay a lot of attention to disruptions of shipping lanes … these things have an effect but it's not nearly as large as less dramatic events like decisions of oil producers on how much to produce and so forth."
Major shipping companies to reroute vessels
Oil giant BP , joining the likes of shipping titans Maersk, Hapag-Lloyd, and Evergreen in rerouting vessels.
It came after the Iran-backed Houthis said they had attacked two "Israeli-linked" vessels in the Red Sea in solidarity with Gaza.
Some of the rerouted vessels will instead go around the Cape of Good Hope, on the Atlantic coast of South Africa's Cape Peninsula - a move that could add a week or even longer to a voyage.
"That adds significant cost to transport," Quiggin said, adding that countries dependent on trade with Europe might see a "moderate" effect on their economy.
"But it would take a while to have much effect on petrol prices in Australia for example."
If the situation dramatically worsened there could be flow-on effects to consumers, said Peter Draper, a professor and executive director of the University of Adelaide's Institute for International Trade. But currently, he did not believe it was significant.
Draper said the ships affected are mostly containers from Europe that hold manufactured goods. Going around the Cape of Good Hope would add "days to the sale time" but any increased cost per good would be dispersed as there is no container shortage.
"I don't see it being dramatic at this stage, but oil would be a more significant line of impact," he said.
Will fuel prices be affected?
Oil and European natural gas prices have climbed after the Houthi rebels stepped up their attacks on ships in the Red Sea, raising concerns about supply disruptions despite ample supply.
"People pay far too much attention to the price of fuel," Quiggin said. "So we get a huge amount of focus on something which will affect the Australian economy far less than, for example, economic slowdown in China."
Quiggin said he doubts the average Australian will see anything more than "the kind of fluctuations we see all the time due to our fuel pricing cycle".
Draper said that "on the margin" he thinks there could be an effect on Australians, but barring a major escalation in the Red Sea, any increase in the cost of living is "unlikely."
"If the Houthis and the Iranians decide the situation warrants it, they could close that strait," he said. "Much depends on the diplomatic ends."
United States Defence Secretary Lloyd Austin announced Operation Prosperity Guardian on Tuesday, a multinational push to conduct joint patrols in the southern Red Sea and the Gulf of Aden to protect trade.
"This is an international challenge that demands collective action," Austin said in a statement, adding that participating countries include the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.
Australia has so far declined the US Navy's request to send a warship to the area, with Prime Minister Anthony Albanese telling ABC Radio on Monday that while he has not ruled out sending a ship "our first priority is in our own region".
- With additional reporting by Reuters.
