White House Alerts Red Sea Turmoil's Impact on US Economy

White House cautions that disruptions in the Red Sea region may potentially impact the US economy.

When questioned about whether those effects would directly affect the finances of Americans, Kirby replied that the administration hasn't observed that phenomenon yet.

Kirby went on to advise that it hinges on the duration and the escalating ambitions of the Houthis. He advised that the White House haven't witnessed any surge or direct impact on the US economy. However, it's crucial to recognize the significance of this international waterway. Nations are increasingly acknowledging the growing threat to unrestricted trade flow.

Kirby, serving as the coordinator for strategic communications for the National Security Council, made this statement at the White House while unveiling a multinational ultimatum aimed at rebel assailants and denouncing recent assaults on commercial vessels in the Red Sea. This ultimatum was jointly issued in a formal statement by the US and 12 other countries. Within the statement they also advised the following:

• 15% of Global Maritime Trade passes through the Red Sea
• 8% of Global Grain passes through the Red Sea
• 12% of Seaborne-traded oil passes through the Red Sea
• 8% of the world's liquified natural gas passes through the Red Sea

To avoid this conflict zone, it would require traveling around Africa's Cape of Good Hope which the formal statement advised would jeopardize “the movement of critical food, fuel, and humanitarian assistance throughout the world.”

On Tuesday, Maersk, the globe's second-largest ocean carrier, declared the indefinite suspension of Red Sea transits. Following a missile attack by Houthi rebels on one of its container ships last Saturday, the company will reroute its vessels around the Cape of Good Hope.

Maersk Halts Red Sea Transits

Before Tuesday's announcement, Maersk had 38 ships slated to traverse the Red Sea on their way to Europe and the U.S. East Coast, along with 25 ships marked with undetermined routes. These vessels are now expected to opt for the lengthier journey. In the week concluding on Friday, the Shanghai Containerized Freight Index (SCFI) surged by 40%, reaching 1,760 points, marking its peak since October 2022. Since this October, the SCFI has more than doubled.

In addition to the U.S. the countries warning against further attacks in the joint statement are Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, Singapore, and the United Kingdom.

Alongside the United States, other nations issuing warnings against further attacks in a collective statement include Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, Singapore, and the United Kingdom. The joint condemnation by 13 countries received commendation from three major maritime shipping groups—World Shipping Council, International Chamber of Shipping, and BIMCO.

These organizations extend gratitude to these nations for their resolute commitment to upholding a rules-based international order and holding accountable those responsible for unlawful seizures and attacks, supporting seafarers and global customers. The shipping associations urge all nations and international bodies to safeguard seafarers and international trade in the Red Sea and to uphold the well-being of the global community by exerting pressure on the aggressors, demanding an immediate cessation of these unacceptable attacks.