Suez Canal Revenue Plunges 60% Amid Attacks on Shipping and Regional Tensions

Revenue from Egypt's Suez Canal has fallen sharply by 60% this year, costing the country an estimated $7 billion. The decline has been attributed to rising geopolitical tensions and ongoing disruptions in the Red Sea, largely caused by attacks on shipping vessels by the Iran-backed Houthi fighters in Yemen.

The Suez Canal, one of the world's most critical maritime trade routes, has been severely impacted by these attacks. Since late 2023, Houthi forces have targeted merchant and naval vessels in the Red Sea, just south of the canal. These disruptions have forced major shipping companies to reroute their vessels around the Horn of Africa, adding extra time and cost to shipments, particularly those connecting Asia, the US, the Middle East, and the Mediterranean. While the diversions have boosted shipping rates and profits for carriers, they have contributed to significant losses in revenue for Egypt.

In response, a multinational force, including US and European military forces, has patrolled the area, providing security escorts for merchant vessels. Despite these efforts, many shipping lines have opted for the longer routes, fearing further attacks in the Red Sea region.

The Houthis claim that their missile and drone assaults are in solidarity with Palestinians in Gaza, amid the ongoing Israel-Hamas war. However, their attacks have intensified, and while their focus on maritime disruption has diminished, they have increasingly targeted Israel directly. Meanwhile, the broader instability in the Middle East, including the fall of the Assad regime in Syria and the withdrawal of Russian forces from certain ports, has added to the uncertainty.

As security improves, there is cautious optimism that Red Sea shipping may return to normal by mid-2025. In the meantime, the United States has launched several strikes against Houthi-controlled facilities in Yemen, targeting missile storage sites and other military infrastructure used in these attacks.