Any escalation affecting these strategic waterways, which connect Asian and Gulf trade to European markets, could force vessels to reroute around the Cape of Good Hope, increasing transit times, insurance premiums, and pressure on global supply chains.
Experts warn that any escalation near key chokepoints, including the Strait of Hormuz and Bab El-Mandeb, could disrupt shipping routes connected to the Suez Canal.
Such developments, experts say, risk increasing transport and insurance costs, pushing energy prices higher, and placing renewed pressure on global trade flows and Egypt’s foreign currency revenues from canal transit.
Yousri El-Sharkawy, international investment adviser and chairman of the Egyptian African Businessmen’s Association, told Ahram Online that any regional escalation in the Gulf and the Red Sea should not be viewed solely from a military perspective, but rather from a broader economic angle that affects global supply chains and investment flows.
Key players in global trade
El-Sharkawy explained that the Strait of Hormuz, Bab El-Mandeb, and the Suez Canal are three critical points in international trade.
“Any disruption in one of them directly affects transport costs, energy prices, and trade movement,” he said.
El-Sharkawy added that any partial closure of the Strait of Hormuz would disrupt operations at major Gulf ports, particularly Jebel Ali Port, pushing companies to seek alternative and more expensive routes.
He warned that diverting vessels toward the Cape of Good Hope route could significantly increase costs.
“The shift to the Cape of Good Hope route, if risks expand, could in some cases triple shipping costs, in addition to a noticeable rise in cargo insurance premiums,” he said.
Such developments, he noted, could affect at least 30 percent of global supply if escalation continues, potentially triggering inflationary waves and placing additional pressure on emerging markets.
El-Sharkawy also pointed to the potential economic implications for Egypt.
“The impact on the Suez Canal will be primarily economic, as transit fee revenues could decline significantly if Red Sea disruptions recur,” he said, noting that the canal represents a strategic source of foreign currency for Egypt.
“Any drop in its revenues would put pressure on the balance of payments,” the expert added.
Coordinated international efforts required
EL-Sharkawy stressed that managing such risks requires coordinated international efforts. “Risk management at this stage requires international economic and logistical coordination, because the repercussions of the crisis, should it escalate, will not be limited to a specific region but will extend to the entire global trading system.”
Ahmed El-Shamy, a maritime transport economics expert and member of the general assembly of the Holding Company for Maritime and Land Transport, told Ahram Online that the latest developments have once again highlighted the strategic importance of the Suez Canal.
“The rapid developments in the Gulf and Red Sea region have once again highlighted the strategic importance of the Suez Canal as a vital corridor for international trade and one of Egypt’s most important sources of foreign currency,” El-Shamy said.
Global trade under threat
“Between 40 and 42 percent of global trade moving from east to west passes through the Red Sea, which means any security tensions in this region are directly reflected in global shipping activity,” El-Shamy explained.
He added that some vessels have already started re-evaluating their routes to avoid areas of tension, particularly around the Bab El-Mandeb Strait.
According to El-Shamy, diverting ships away from the Red Sea toward alternative routes around the Cape of Good Hope increases travel time by around 10-18 days.
“This raises shipping, insurance, and transportation costs, which ultimately translates into higher global commodity prices,” he noted.
El-Shamy also warned that energy shipments would be among the sectors most affected if tensions escalate. “Energy prices could rise by between $10 and $20 per barrel if tensions escalate, potentially generating a new global inflationary wave that would affect supply chains and production costs,” he said.
While stressing that navigation within Egyptian waters is not directly threatened, he stated that the economic repercussions remain significant. “These developments do not represent a direct threat to navigation within Egyptian waters, but they carry indirect economic repercussions. The Suez Canal generates around $10 billion annually, which is a highly significant figure given Egypt’s need for foreign currency.”
El-Shamy also noted that the current period is relatively slow for global trade. “The period from mid-December to March is relatively one of the weakest seasons for global trade due to slower global production, particularly in China.”
According to the expert, this may limit the immediate impact of events, but does not diminish the need for alternative plans and flexible logistics management to maintain the flow of ships and goods.
He emphasized that proactive planning and international coordination are crucial in managing maritime crises, adding that the Suez Canal remains a central pillar of Egypt’s economic security and global trade stability.
Wider regional impact
Mahfouz Taha, former director of the Naval Academy, explained to Ahram Online that the current regional tensions have already begun to influence maritime transport, particularly in the Strait of Hormuz, through which around 20 percent of global oil trade passes.
“This makes it one of the most important strategic corridors for global energy flows. Any disruption in this strait does not affect only international markets but extends to exporting and importing countries alike,” he said.
Taha noted that Iran itself would likely face significant consequences if tensions escalate, given that its oil exports rely heavily on passing through Hormuz toward Asian markets, particularly China and India, which depend significantly on Iranian crude.
“Disruptions in supply lines to Asia, where major global manufacturing hubs are located in China, India, Japan, Indonesia, and Vietnam, would increase shipping and insurance costs for oil tankers,” he explained.
Inflationary pressure looms
This would, in turn, push global energy prices higher and increase inflationary pressures, according to Taha.
“Major exporters outside the conflict zone, such as Russia and Norway, may benefit from higher oil prices, while importing countries will bear the largest burden,” he said.
Taha noted that the US, as one of the world’s largest oil producers, could also benefit from price increases. The impact on Iran’s exports to Europe would remain relatively limited, however.
Worst-case scenario
Regarding the Red Sea, Taha said conditions in Bab El-Mandeb are currently stable.
“The worst case scenario would be an expansion of military operations to include hostile moves by the Houthis, similar to what occurred in 2023 and 2024, when some commercial vessels faced risks that forced them to divert toward the Cape of Good Hope to avoid passing through Bab El-Mandeb and the Suez Canal,” Taha said.
“A repeat of this scenario would lead to a decline in transit traffic through the Red Sea, negatively affecting regional ports, including Saudi ports such as Jeddah and Yanbu, as well as Egyptian ports, particularly Sokhna and Safaga,” he said.
It would also directly impact Suez Canal revenues, which had already fallen from more than $10 billion to around $4 billion during previous periods of disruption, the expert added.
Taha also commented on speculation about the potential closure of the Strait of Hormuz. “There is practically no such thing as completely closing the Strait of Hormuz due to its international navigation status,” he said.
He noted that the real impact lies in rising insurance costs and operational risks, which would push oil prices higher even without a full closure of the strait.
Although the current situation does not involve direct disruptions in Bab El-Mandeb, continued escalation could reshape maritime trade routes, he continued.
“This would carry direct consequences for energy trade and global supply chains,” Taha warned.
Hamdi Barghout, an international transport expert, said the Suez Canal relies heavily on oil tankers travelling from Gulf countries to Europe, a segment accounting for roughly one-third of the canal’s operational importance in energy trade.
He noted that any military escalation in the Red Sea would increase the region’s war risk, raising insurance costs for cargo and vessels by 0.5 to 1 percent of their value.
Barghout warned that a broader regional conflict could severely disrupt maritime navigation. “This would directly affect the Suez Canal through fewer transiting vessels, lower transit revenues, higher global fuel prices, and slower international trade,” he said.
Although the canal handles about 10 percent of global trade, its importance lies in the goods passing through, especially energy and strategic commodities, making disruptions far more impactful than the volume alone suggests.
Barghout cited an incident involving an oil tanker from Bahrain scheduled to transit the canal with fees of nearly $400,000. “Security risks forced a direct loss of transit revenue, and other tankers reconsidered their routes for the same reason,” he said.
He noted that these developments come as the canal was beginning to recover from previous disruptions. “Recent indicators had been positive, with the transit of massive vessels, including some of the largest ships in the world, raising expectations that the canal would gradually return to normal before being affected by events linked to the war in Gaza,” he added.
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