Houthis hit Russian fuel tanker: Houthi fighters carried out a fresh round of attacks on vessels sailing through the Red Sea over the weekend, hitting a ship carrying Russian fuel operated by multinational commodities trader Trafigura. The attack set fire to one of the ship’s cargo tanks, the company said in a statement on Friday shortly after the attack. The company confirmed that the fire had been fully extinguished and that all crew members were safe and thanked Indian, US, and French naval vessels for assistance.

US strikes back: Hours after the attack on the fuel tanker, the US Navy launched an attack on what it said was a “Houthi anti-ship missile aimed into the Red Sea and which was prepared to launch,” US Centcom said in a statement on X. The US Navy spotted the missile and “determined it presented an imminent threat to merchant vessels and the US Navy ships in the region.”

There had been an understanding that Russian ships wouldn’t be attacked: Senior Houthi official Muhammed Al Bukhaiti had said that only American, British, and Israeli — or Israeli-linked — ships would be targeted and reassured other nations that “for all other countries, including Russia and China, their shipping in the region is not threatened” in a 19 January interview with Russian newspaper Izvestia.

Chinese firms have been betting on Houthi promises: A number of smaller Chinese shipping lines have been flocking to fill the vacuum of ships navigating the Red Sea route under their “perceived immunity” from Houthi missiles, wrote the Financial Times one day before the attack on the Trafigura-operated vessel. One of the opportunistic shipping companies emphasizes on its website that its ships prominently display the Chinese flag and sail though the Red Sea with Chinese navy escorts, the salmon-colored paper adds.

The US is pressing China to help bring pressure to bear on the Houthis, the FinancialTimes notes.Beijing, worried about how the disruptions could impact its own exports, is now reportedly pushing Tehran to tell its proxies that enough is enough. Don’t play ball? Business ties with China are at stake, diplomats have reportedly warned Iran, according to an exclusive from Reuters.

THE EGYPT ANGLE-

Suez Canal Authority (SCA) revenues will be “severely affected” this year if commercial vessels continue to divert their routes from the waterway, SCA boss Osama Rabie told Asharq Business. The Houthi attacks have increased costs and risks for maritime lines and pushed many companies to reroute around the Cape of Good Hope or even look to air freight and overland routes as alternatives.

By the numbers: Suez Canal receipts have fallen 44% y-o-y to USD 802 mn in January 2024, Rabie told the outlet. Egypt has lost about USD 150 mn in Suez Canal revenues due to ongoing Red Sea disruptions, according to estimates shared by Bloomberg’s chief emerging markets economist Ziad Daoud earlier in the month.

Deutsche Bank warns about what a full disruption to Suez Canal traffic would mean for our economy: Egypt could lose around USD 2 bn in revenues over a three-month period if disruption in the Red Sea leads to ins. premiums rising to “unsustainable levels” that it effectively stops Suez Canal traffic, the multinational lender warned in a research note seen by Enterprise. However, Deutsche Bank put the risk of a full closure of the channel as “unlikely” and instead predicted that “Egypt is likely to witness a partial — but not complete — loss in its revenue stream from the Suez Canal.”

But even if we avoid a shutdown, a prolonged conflict will worsen our FX crisis: “Cumulative pressures, in the event of a prolonged conflict, could further exacerbate Egypt’s existing FX shortages,” the bank warns. With US President Biden acknowledging the minimal effect of recent strikes in Yemen and the Houthis’ commitment to target ships until a ceasefire is implemented in Gaza, there is a slim chance that the Houthis will change tactics anytime soon, the note adds.

Improvements in our currency account deficit are predicted to be undone: Our current account deficit is predicted to widen to 3.4% in the fiscal year 2023-2024, from the 1.2% recorded in the previous fiscal year, on the back of a reduction in tourism and energy exports, Deutsche Bank added.

But it’s not all doom and gloom from Deutsche Bank, which still believes that inflation will continue to its downward path throughout the year and that refugee flows and regional instability will increase the likelihood of expanded and additional support packages from multinational lenders and organizations.

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