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  • Thursday, January 18, 2024 at 5:02 AM
    Last Update : Monday, January 29, 2024 at 6:40 AM

Yemenis Fear Rising Living Costs Due to Houthi Red Sea Attacks

(AWP) - Yemeni officials and economic experts are fearing yet another increase in living costs due to the Houthi militia attacks in the Red Sea, which may force major shipping companies to avoid passing through the Bab al-Mandab Strait.

Houthis have recently carried out dozens of attacks on commercial ships in the sea and strait, with the group saying it won’t allow the passage of any vessels carrying goods to Israel until aid is allowed to enter for Palestinians in the besieged Gaza Strip.

Several international shipping companies have announced the suspension of their routes through the Red Sea and are instead opting for longer journeys via the Cape of Good Hope, to avoid being exposed to security threats.

According to Saleh al-Jurairi, Director of the Yemen Petroleum Company in Aden, navigation through the Cape of Good Hope will lead to “increased transportation costs, and thus a rise in food prices and an increase in general inflation.”

He added, “It is known that 30% of the costs of goods and products in general are due to transportation costs. However, escalating disruption will increase this percentage by many times, and this will be followed by an increase in the value of the transported materials, whether they are manufactured, or raw materials used in industry. When their costs rise, it will lead to an increase in their price, thus affecting consumers and the economic situation of any country.”

Yemeni officials also point out that the Houthi attacks have led to a significant rise in insurance fees for transportation companies operating in the Red Sea, reaching up to 500%.

Meanwhile, economists fear a price hike in petroleum derivatives, as Yemen relies on oil imports to meet its needs.

Hamdi al-Sharjabi, a Yemeni economic expert, said, “Yemen is suffering from a severe shortage [of oil derivatives], as the strategic reserve does not exceed six months, and there are no large [storage] tanks. Therefore, oil prices will rise significantly, affecting the lives of Yemeni citizens.”