Markets brace for prolonged Red Sea risk

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WHAT WE’RE TRACKING TODAY

TODAY: Red Sea back in focus as Houthis threaten disruptions

Good morning, ladies and gents. It’s another morning where the regional war is redrawing the energy map — one chokepoint at a time. Today, we’re zeroing in on a pressure point that doesn’t need a shot fired to move markets: the Red Sea. The Houthis are back — and with them, Bab Al Mandab as a live logistical risk.

Plus: We take a look at how oil flows are fragmenting and what that means for a currency system where the greenback is no longer uncontested.

The big logistics story abroad

The regional war dominates global headlines, again: US President Donald Trump told aides he is “willing to end the US military campaign against Iran even if the Strait of Hormuz remains largely closed,” the Wall Street Journal reports. Trying to open up Hormuz would extend the war beyond his timeline, according to officials cited by the news outlet. Trump’s comments came shortly after he reiterated his threat to destroy Iran’s energy infrastructure if it does not open the strait.

From the Dept. of Ongoing Disruptions

Iranian forces struck a fully loaded Kuwaiti oil tanker anchored at Dubai Port, resulting in a fire aboard the vessel, Bloomberg reports, citing a statement from the Kuwait Petroleum Corporation. The strike may have triggered an oil spill in the area, the Kuwaiti oil giant said. No injuries were reported, and Dubai authorities have managed to extinguish the resulting fire.

Projectiles also landed close to a Greek-owned container ship near Ras Tanura, Reuters reports, citing maritime risk management outfit Vanguard. The Liberian-flagged Express Rome reported two such incidents occurring one hour apart, and that its crew was unharmed. Although no group claimed responsibility for the incident, Iran’s Islamic Revolutionary Guard previously claimed to have attacked the Express Rome while crossing the Strait of Hormuz earlier this month.

Watch this space

AVIATION — Emirates’ biggest edge right now may be the price of staying insured. Dubai’s flag carrier Emirates has secured war-risk cover for about USD 100k a week for its entire fleet flying to and from Dubai — in contrast with non-Gulf airlines, which have been quoted USD 70k-150k per flight into the region. The policy essentially covers Emirates for the first USD 2 bn of losses on its fleet, ins. providers said.

Why it matters: Non-Gulf carriers are being priced on a flight-by-flight basis, with each rotation into the region carrying its own war-risk premium. Emirates — by contrast — operates under a large, fleet-wide ins. structure, allowing insurers to assess risks across its network rather than on a per-flight basis — giving it a more stable and significantly lower cost base.

Gulf carriers on different terms: Airlines based in the Gulf are generally getting more flexible rates than foreign rivals with aircraft based elsewhere, aided by operating hundreds of daily flights through regional airspace and by closer coordination with airports and local authorities.

Other carriers are back in the air too: Etihad is operating from Abu Dhabi, Air Arabia from Sharjah, and Qatar Airways is running a limited service from Doha — but Emirates remains the largest by a wide margin, with more flights in the system than Etihad and Qatar combined.

SHIPPING — Tanger Med is getting ready for the spillover from war in the Middle East. Morocco’s Tanger Med port is preparing for higher vessel traffic as carriers reroute around the Cape of Good Hope, with Maersk, Hapag-Lloyd, and CMA CGM already shifting routes. The port’s authority says the immediate focus is capacity management and avoiding congestion.

The pressure has not fully landed yet: Tanger Med management expects the real impact on cargo flows to only show up by mid-to-late April, with Cape diversions adding roughly 10-14 days to transit times into the Moroccan hub.

Risk management test? The port handled 11.1 mn containers in 2025, up 8.4% y-o-y, reinforcing its position ahead of competing Mediterranean hubs, with route connections to roughly 180 ports globally.

TRADE — Will Aswan soon cement itself as Egypt’s export gateway to Africa? The Upper Egyptian city is looking to cluster industrial and commercial projects within dedicated logistics zones as part of a plan to position itself as a strategic gateway to the wider continent, Aswan Governor Amr Lashin said on Sunday at an event attended by EnterpriseAM. To get private players on board, the state is developing a set of incentives to encourage exports to the African Continental Freetrade Area.

TRANSPORT — Licensed transporters can temporarily move third-party goods: Saudi Arabia’s Transport General Authority has granted licensed commercial transport players the green light to move goods for third parties until 25 September, it said in a statement. To qualify, a vehicle must be registered for public transport, with all its operations recorded via the Logisti platform to maintain transparency and regulatory compliance.

Market watch

Oil prices held steady this morning as investors weighed the potential for conflict resolution against supply risks, Reuters reports. Brent crude futures for May gained USD 0.18 to trade at USD 112.96 / bbl by 04.38 GMT, while US West Texas Intermediate (WTI) declined USD 0.25 to USD 102.63 / bbl.

The Baltic Index declines once again: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 0.7% to 2,017 points on Monday. The capesize declined 0.9% to 3,004 points, while the panamax index slipped 0.8% to 1,742. The smaller supramax shed 3 points to reach 1,203 points.

PSA

Yang Ming reroutes GS2 as Hormuz risk deepens: Taiwanese shipping firm Yang Ming is diverting incoming GS2 vessels from their original rotations and keeping them on standby near the Middle East instead of calling at Indian ports or discharging cargo. The line says normal operations will resume when conditions stabilize, warning that the disruption could trigger additional freight, terminal handling, reshipment, and related charges for shippers under the bill of lading terms.

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Chokepoint checkmate… round two?

Could the Red Sea drift back into the conflict? After a month of relative silence, the Houthis have re-entered the fight with missile and drone attacks on Israel, signaling a return to active escalation. The message was clear: this front is back online, and it comes with a lever that hits far beyond the initial battlefield — Bab Al Mandab.

This is less about what’s been hit — and more about what might be: The group has not (yet) resumed systematic attacks on commercial shipping, but it doesn’t need to. The last Red Sea cycle already showed how this plays out. Risk perception alone can shut the corridor. Shipping lines reroute, ins. premiums hike, and a technically open waterway becomes commercially unusable.

The market has seen this movie before — and it doesn’t wait for confirmation. During the previous wave of Red Sea attacks, carriers preemptively diverted vessels around the Cape, adding weeks to transit times and sharply increasing freight costs. Operators treated the route as functionally closed even when ships could “physically” pass.

The signal now is escalation sequencing: The Houthis stepping back in after a month fits into a broader pattern of staggered pressure. It keeps uncertainty alive, stretches response capacity, and avoids peak escalation too early. From a market perspective, that’s worse than a single shock — it prolongs instability and keeps pricing volatile.

Egypt: Suez recovery could take another hit

For Egypt, this is the scenario policymakers were hoping to avoid — and it lands at the worst possible time: the Suez Canal had only just begun showing tentative signs of recovery (read here and here) after prolonged disrupted traffic, with the Red Sea getting a second chance. A renewed perception of risk in the Red Sea effectively shuts that window.

Even without direct attacks, the economics break fast: Shipping companies don’t wait to absorb losses, so they reroute early. Ins. underwriters also don’t price for best-case scenarios — they price for tail risk. The result is the same: fewer transits, lower revenues, and another blow to one of Egypt’s most critical sources of hard currency.

This is where it turns into macro variables: The canal is not just a logistical asset — it’s a balance-of-payments stabilizer. When flows drop, the impact runs straight through FX inflows, import bills, and fiscal planning.

And the second-order effects hit just as hard: Longer shipping routes mean higher import costs across the board — energy, food, and intermediate goods.

Saudi Arabia: The Yanbu workaround starts to look exposed

For Saudi, the risk is more strategic: The Kingdom’s hedge against Hormuz risk is its westbound export infrastructure to the Red Sea — the East-West pipeline — anchored around Yanbu Port.

That hedge only works if the Red Sea stays open: The entire logic of bypassing Hormuz depends on secure onward access through Bab Al Mandab — but that vulnerability is most acute for flows heading to Asian markets. Rerouting crude to the Red Sea reduces reliance on Hormuz, but ultimately shifts exposure to another critical chokepoint, leaving the workaround vulnerable to disruption further along the route. The Kingdom’s facilities at Yanbu were targeted by an Iranian drone last week.

The targeting logic is flexible: Vessels don’t need to be Saudi to be exposed. Any ship with perceived links — cargo origin, ownership, ins., destination — can be framed as a legitimate target. That ambiguity is enough to push operators out of the route entirely.

The pressure is on

Why this matters: The world is staring at simultaneous risk across its two most critical maritime chokepoints. These aren’t interchangeable routes; they anchor the bulk of global energy flows and a significant share of Asia-Europe trade, with no scalable substitutes. If both are disrupted at once, that feeds directly into energy prices, freight costs, and inflation.

The real story isn’t whether these routes close — it’s that they don’t need to. It’s a more durable form of disruption because it is harder to resolve; you can reopen a waterway, but you can’t instantly restore confidence.

What to look for: Whether risk perception translates into behavior. If war-risk premiums spike — even more — and underwriters start pulling coverage, carriers will reroute regardless of actual incidents. The tipping point is commercial, not military — once enough operators exit the Red Sea, the corridor effectively shuts again.

Oil without the greenback?

Could we see an erosion in the petrodollar’s dominance? Regional disruptions have turned what used to be a slow, policy-driven conversation about dedollarization into a live market event, with currencies now competing for barrels in real time.

Why this matters: The war is accelerating a shift that was already underway — from a single-currency system to a multi-currency one. Even limited adoption of alternative currencies in oil trade weakens the USD’s role, not just as a payment tool, but as the default financial rail underpinning global energy trade.

BACKGROUND- The petrodollar system dates back to the 1970s, when the US secured an agreement with Saudi Arabia — and by extension, Opec — to price oil exclusively in USD in exchange for security assurances, effectively anchoring global demand for the currency. That system still dominates, with roughly 80% of global oil trade settled in USD. But the underlying flows have shifted, with Saudi exports to China now significantly exceeding flows to the US.

The eastward shift: While the war may be a catalyst, the structural realities of the global oil trade had already shifted eastward long before the first missile was fired. The customer base for Gulf crude has changed as the US is now effectively energy independent following rapid advances in shale oil production.

Cracks in the barrels: That mismatch — between pricing currency and trade reality — is where cracks are forming. China has spent years trying to internationalize the CNY, with limited success in energy markets. Now the war is doing the heavy lifting.

The trigger

Hormuz is becoming a gatekeeper for currency, not just cargo: Reports that Iran may allow vessels through the strait only if payments are settled in CNY signal a shift from physical control to financial leverage. China is already the largest buyer of Iranian crude, meaning the demand side is aligned with the currency shift.

This is how the “petroyuan” stops being a narrative and starts being a mechanism. A note (pdf) by Deutsche Bank framed the conflict as a trigger point, where the petrodollar begins to erode and a parallel system starts to emerge. If access to supply is conditioned on currency, buyers adjust.

The irony: “Even if just a fraction of transactions switches currency, the irony will be stark: A US-launched war will help normalize non-USD energy sales, succeeding where years of Chinese diplomacy have not,” said Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations.

The mechanism

India is where this shift becomes operational: Indian refiners are increasingly settling Russian oil purchases using alternative currencies such as CNY and the UAE’s AED. Indian INRs are deposited into offshore accounts, then converted into AEDs or CNYs — a multi-step workaround designed to bypass USD exposure.

On the supply side, Russia is making its position explicit. After the US recently issued a sanctions waiver on Russian oil imports, the Russian deputy energy minister said Moscow will continue supplying energy at market prices using “mutually accepted payment practices” — effectively signaling non-USD settlement when needed.

Even US allies are starting to adapt, with Washington’s blessing: South Korea has secured approval from the US to pay for Russian petroleum products, including naphtha, in non-USD currencies without triggering secondary sanctions.

This is how fragmentation begins: Each waiver, workaround, and bilateral arrangement chips away at the USD’s exclusivity. None of these moves individually dethrones the petrodollar — but collectively, they create a parallel system that didn’t scale before.

System impacts + limits

The implications are bigger than oil — they hit the core of how global markets are structured. If even a fraction of the oil trade shifts into other currencies, the effects ripple into reserves, bond markets, and trade balances. The USD’s role isn’t just transactional — it underpins global savings and pricing systems. A move toward multi-currency energy trade would dilute that foundation.

But the alternative isn’t ready to fully take over — and that’s where the friction sits. The CNY is not freely convertible and isn’t widely held as a reserve asset, which creates operational constraints for buyers (that’s why India did that workaround). A shift away from the USD introduces some kind of volatility — not just in currencies, but in financing, hedging, and trade settlement. Surely markets can adapt (as they always do) but not instantly.

A clean replacement? Or a split system? Instead of a single dominant currency, energy trade starts to split across multiple rails — USD, CNY, and other regional currencies as the AED, Singapore’s SGD, and Hong Kong’s HKD. Gulf states are already testing this direction through projects like mBridge, exploring alternatives to USD-based payment systems.

The real shift is structural: No major player is abandoning the USD outright, but more of them are building the option not to use it, and that’s enough to change how the system behaves. The petrodollar’s strength was never just dominance — it was a lack of alternatives.

What this means

The signal: The petrodollar isn’t ending — it is, however, losing its monopoly. What replaces it isn’t a clear handover to the CNY, but a split system where currency becomes another lever in the energy trade.

What to look for: The exceptions, the waivers, the bilateral agreements, and the currency-linked trade conditions. If they scale, they don’t just bypass the greenback — they redefine how energy is paid for.

DP World buys into Russia’s Arctic shipping play

Rosatom and DP World have a new JV in the works

Rosatom taps DP World for a new JV: Dubai-based operator DP World is snagging a 49% stake in a new logistics joint venture with Russia’s state nuclear firm Rosatom, which will hold 51%, Reuters reports. The partnership opens a channel into Russian-linked container flows and North Sea routes, a lane Rosatom is trying to scale into a commercial corridor.

The structure: Rosatom will fold in its 92.4% stake in transport group Fesco, while DP World will bring liquidity tied to Fesco’s valuation.

This isn’t a first date: DP World and Rosatom have been building toward this since 2021, signing Arctic route agreements and setting up a similar 51/49 joint venture — International Container Logistics — back in 2023.

Damietta expands Ro-Ro service to route EU cargo to the Gulf

Damietta Port has launched a new service to handle refrigerated and dry cargo arriving from Europe on the Trieste-Damietta Ro-Ro line before forwarding shipments to Gulf markets through Safaga under an indirect transit model, according to a document seen by EnterpriseAM.

What changed? The service comes after transit cargo bound for Gulf countries was exempted from prior ACI registration, easing procedures at a time when regional shipping disruption is pushing cargo owners to look for faster and more predictable routing options. Damietta has already received the first indirect transit units on the Gallipoli Seaways.

Why it matters: This gives Egypt another live corridor to pitch to shippers moving perishables and other time-sensitive cargo between Europe and the Gulf. It also shows how Damietta’s digital systems, customs coordination, and the Damietta-Trieste Ro-Ro link are being used for more than bilateral trade with Europe — they are now being positioned as transit infrastructure for cargo flows trying to bypass friction elsewhere in the region.

Maersk adds three shipping services to Saudi ports

Shipping giant Maersk has added three new shipping services to Jeddah Islamic Port and King Abdullah Port, linking them to key regional and international hubs — India’s Nhava Sheva and Mundra, and Oman’s Salalah — supporting a total capacity of 14.4k TEUs, according to a statement.

Calendar

APRIL

16-17 April (Thursday-Friday): Global Supply Chain and Logistics Summit, Amsterdam, The Netherlands.

23-24 April (Thursday-Friday): Sustainability World Summit, Frankfurt, Germany.

28-30 April (Tuesday-Thursday): Mediterranean Ports and Logistics, Porto, Portugal.

MAY

12-14 May (Tuesday-Thursday): Aviation Energy Forum (AEF), Paris, France.

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

4-5 June (Thursday-Friday): Supply Chain and Logistics Summit, Amsterdam, Netherlands.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

10-11 June (Wednesday-Thursday): Black Sea Ports and Logistics, Istanbul, Turkey.

21-24 June (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

AUGUST

30 August-1 September (Sunday-Tuesday): Air Cargo Middle East, Riyadh, Saudi Arabia.

30 August-1 September (Sunday-Tuesday): Saudi Warehouse and Logistics Expo, Riyadh, Saudi Arabia.

SEPTEMBER

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

22-24 September (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

12-14 October (Monday-Wednesday): The Airport Show, Dubai, UAE.

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

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Markets brace for prolonged Red Sea risk

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TODAY: Red Sea back in focus as Houthis threaten disruptions