Ships change their route to avoid passing through the Red Sea. (Image: Portal/Umit Bektas/File Photo)
Attacks by the Houthis, a Yemeni rebel group, in the Red Sea region have disrupted shipping traffic.
Since last week, the likes of BP and Mediterranean Shipping Company (MSC) have announced changes to or suspension of the route to avoid passage through the Suez Canal, which connects the Mediterranean and the Red Sea.
During this period, Brent oil reached a price of over $80 per barrel.
The group has carried out attacks on ships bound for Israel carrying cargo out of the country in support of Hamas. However, ships that have no connection to Israel, such as the MT Swan Atlantic, are also attacked. Only humanitarian aid and Red Cross ships can circulate freely.
Tensions are highest in the region of the Mandeb Strait, a canal that connects the Red Sea to the Indian Ocean and separates the continents of Asia and Africa. To overcome this situation, ships follow the route through southern Africa, increasing travel days and costs.
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Implications for Brazil
Although Brazil rarely uses it as it represents a link between Asia and Europe, transit through the Red Sea is important for national segments trading with the Middle East.
For example, according to Mario Veraldo, CEO of MTM Logix, a logistics company for Brazil, it exports Meat for countries in the Middle East could be affected, as around 21% of this category transits the Suez Canal.
Additionally, according to MTM Logix, a general increase in transportation tariffs and war surcharges is expected, potentially affecting all services related to maritime trade.
Although it is not comparable to the situation in 2021, when Brazil was hit by a surge in cargo volumes following the closure of Chinese ports during the Covid19 pandemic, the current scenario could also have an impact on the national market.
Maersk, the shipping company that had stopped transporting ships along the Red Sea route, stopped transporting oil and liquefied natural gas. If this measure is followed by other companies in the industry, it will create a cascading effect for the buying countries petroleum.
The rise in raw material costs may also lead to a scenario that Brazilians know and fear: the rise in fuel costs.