The Red Sea and the Risk of a Wider Regional War

Escalating tensions in the Gulf are heightening global concerns over a new disruption to navigation in the Red Sea. Such a development would impose new constraints on an already costly global maritime trade network while triggering another supply crisis in areas close to the conflict zones surrounding the Strait of Hormuz and the geopolitical risks associated with them in the Middle East, should the conflict drag on. The same scenario has repeated itself so often that it has become almost predictable.

President Donald Trump has raised his threats to their highest level. Washington is openly discussing the possibility of a large-scale strike, while Secretary of State Marco Rubio speaks of alternatives to the Strait of Hormuz. Markets have begun pricing in the prospect of a regional war. Oil prices surge, stock markets retreat, and the region slips deeper into uncertainty.

Political leaders, meanwhile, view the crisis through their own respective lenses. Some are guided by the calculations of upcoming elections, others by shifting balances of power and influence. Lobbying groups and major corporations, for their part, continue to operate according to the logic of interests and profits, at times benefiting from the very market volatility created by the crises themselves.

Financial markets no longer regard this pattern as an exception but as a recurring reality. Every escalation pushes oil prices higher over fears of disruptions to energy supplies. As soon as signs of de-escalation emerge, prices begin to fall once again. The same dynamic affects financial markets, which react sharply to every new threat before recovering part of their losses whenever the prospect of an agreement reappears.

Despite this, concerns continue to mount over further disruptions to maritime traffic through the Strait of Hormuz, as container shipping activity across the Gulf of Aden, the Bab el-Mandeb Strait, and the Suez Canal has already declined sharply. More than fifty countries have been affected so far. In several African nations, including Nigeria, the ongoing conflict has worsened poverty and child hunger. In Germany, production at Tesla factories has slowed after more than eighteen international shipping companies rerouted their vessels around the Cape of Good Hope, delaying the delivery of industrial raw materials. The Japanese shipping giant NYK has also suspended its operations through the Red Sea.

This diversion has quadrupled shipping costs because of the much longer route along the African coastline. It has also disrupted global supply chains and delayed the delivery of industrial and technological components from China, Taiwan, and other East Asian economies.

Over recent months, a growing number of commercial vessels have abandoned their traditional route through the Gulf of Aden and the Suez Canal in both directions. These waterways previously handled nearly 20,000 cargo ships each year out of a global merchant fleet of approximately 105,000 vessels, which transported nearly 15 billion tons of goods and raw materials by sea in 2024.

The return of inflation has become one of the greatest challenges facing governments worldwide, even after they had partially adapted to the economic consequences of disruptions around the Strait of Hormuz. The situation revives memories of the imbalances that marked the global economy in the wake of the Covid-19 pandemic.

Europe is increasingly concerned about rising oil prices and the possibility of a broader conflict across the Middle East. European Union economies continue to bear the heavy costs of Russia’s war in Ukraine. Any shift in U.S. strategy would usher in a new economic reality for Europe, marked by widening disparities in growth and an increasingly uneven competitive landscape.

European leaders appear deeply unsettled and must make decisions quickly. They are ill-equipped to withstand another economic shock combining inflation, unemployment, and climate-related disasters, while the European Union continues searching for alternative energy suppliers located much farther away.

By contrast, during the months of the American war against Iran, the U.S. economy, driven primarily by domestic demand, remained relatively resilient. At the same time, U.S. trade with North American partners and ASEAN countries expanded to around $1.2 trillion, while maritime trade routes increasingly shifted toward the Pacific Ocean. China’s trade, meanwhile, reached approximately $800 billion.

The exploration of the seas ranks among humanity’s greatest adventures. It transformed the Mediterranean, with all its trade and wealth, into a vast arena of exchange linking the ancient Phoenicians, Greeks, Egyptians, North Africa, Southern Europe, and India. Rome laid the foundations of its commercial and military sea routes there.

The voyages of Christopher Columbus and Vasco da Gama, the Silk Road journeys associated with Marco Polo, and Admiral Ferdinand Magellan’s circumnavigation of the globe all contributed to opening new maritime routes for international trade.

Yet the sea serves far more than a single purpose. More than one million people earn their living in the maritime sector, whether aboard ships or on docks and in ports. Beyond them lie entire industries built around shipbuilding, fishing, recreational boating, and maritime tourism. The maritime economy also supports development strategies by stimulating numerous industrial sectors, including steel, aluminum, cable manufacturing, and fiberglass production.

Any expansion of maritime conflicts, from Bab el-Mandeb to the South China Sea and the Sea of Japan, at a time when the global economy is growing by barely 3%, would generate further political and economic repercussions. Its economic and psychological consequences would continue to weigh heavily on the lives of millions of people.

Financial analysts estimate that goods worth no less than $3 trillion pass through the Red Sea every year, accounting for roughly 13% of global trade, a figure projected to rise to $5 trillion by 2050.

Despite the strategic importance of this global trade corridor, the Red Sea route still lacks many essential maritime services and infrastructures. These include shipyards, maintenance facilities, maritime industries, and institutions responsible for ensuring the free flow of international trade. It also lacks the broader logistics ecosystem required to support international shipping, including the movement of nearly 80% of globally traded food products, particularly grains and palm oil.

There are also growing concerns that regional transport and supply routes could be redrawn at the expense of Egypt and several African countries. Egypt stands to lose the most, as revenues from the Suez Canal, estimated at around $11 billion annually, remain under pressure. Approximately 15% of global trade, 30% of worldwide container traffic, and 8% of global crude oil shipments pass through the canal.

Meanwhile, Israel has established its largest military observation post and most important strategic platform in Eritrea, overlooking the Strait of Tiran. Its confrontation with Iran is fueling tensions that could escalate into broader regional and international violence while encouraging piracy and identity-driven violence, with potentially serious consequences for Arab national security.

Yet the Arab world still lacks a comprehensive common strategy to secure this vital maritime passage and build an effective framework for collective Arab security. Such a vacuum risks undermining the role of regional states, weakening their political independence, and eroding their strategic vitality.

Thus, oil prices may decline after President Trump announces the postponement of any military strike, and stock markets may rally on reports of an imminent agreement. Yet none of this means that peace has been achieved or that the underlying causes of tension have disappeared.

The Middle East is living through neither an open war nor a stable peace. Instead, it exists in a gray zone between the two, where the instruments of confrontation constantly evolve while their economic and psychological consequences continue to shape the lives of millions of people.

Any new escalation would affect everyone. It would weigh on global growth, fuel inflation, drive up the cost of gasoline, electronic devices, and insurance premiums, and accelerate the search for alternative shipping routes, including the development of “green maritime corridors” discussed at the Glasgow Conference.

It would also encourage investment in port infrastructure, the liberalization of the maritime sector in Morocco and across Africa, advances in technology, logistics services, and digital connectivity, as well as the expansion of offshore industries, maritime simulators, and maritime academies.

This recurring cycle of crises does not suggest that the region is moving toward peace. On the contrary, it reveals a different reality: neither all-out war nor genuine stability, but the permanent management of crises. Escalation has become a negotiating tool, threats have become instruments of political leverage, and negotiations increasingly serve to postpone confrontation rather than resolve it.

Yet amid this political and strategic confrontation, only one party continues to pay the real price: the people. Will Arab states recognize the importance of developing strategies to protect their “oil sea”, the maritime space that remains one of the central pillars of global trade?