Geoeconomics of the Red Sea Crisis: Trade Chokepoints and the Cost of Maritime Insecurity

“The Deepening Red Sea Shipping Crisis: Impacts and Outlook” World Bank´s article from February 2025, summarises perfectly the current situation in the Red Sea. Since late 2023, the area has become the epicentre of maritime insecurity. This paper analyses the ethnohistorical reasons with a focus on the Houthi's routes, the geo-economic and geopolitical implications of the consequences of this conflict, with a particular focus on strategic chokepoints such as the Bab el-Mandeb canal and the whole cost of maritime instability. It integrates the most recent data from the global institutions to examine trade diversion, inflationary pressures, port activity shifts, and environmental degradation. All of this instability has created a perfect picture of cause-and-effect dynamics, which sometimes are reversible.

The Bab el-Mandeb Strait has a historical meaning. It could be translated as “Gate of Tears” in Arabic, with bab that means “gate” and mandeb “lamentation”. It is a narrow waterway — only 20 nautical miles, around 40 km, wide and 70 nautical miles (130 kilometres) long — that links the Gulf of Aden and the Indian Ocean to the Red Sea. It separates the Horn of Africa (Djibouti and Eritrea) from the Arabian Peninsula (Yemen) and forms the southern gateway to the Suez Canal route, one of the most important maritime corridors in the world.

After the construction of the Suez Canal in 1869, Bab el-Mandeb became the point of reference for Eurasia commercial trade. The name “Gate of Tears” could also likely refer to the historical dangers of navigating the strait: strong crosscurrents, treacherous winds, reefs, and shoals made it a deadly passage for ancient seafarers. Given its treacherous currents and strategic vulnerability, the name “Bab el-Mandeb” could be seen as a prophetic warning about the enduring volatility of the region across centuries. Some theories suggest early Homo sapiens crossed this strait en route from Africa to Eurasia.

Today, the Bab el-Mandeb Strait is surrounded by several international military bases, including those of China and the United States. One of the most prominent is Camp Lemonnier, located in Djibouti on the site of a former French Foreign Legion base in what was once known as French Somaliland (1884–1977). Originally established by the French, the base now serves as the primary U.S. military installation in Africa. Its strategic location enables constant surveillance of the Arabian Sea and provides a critical vantage point for monitoring all maritime traffic passing through the Bab el-Mandeb Strait. Why is this so important?

The strategic relevance of the Bab el-Mandeb Strait is not a recent development. During the 1973 Yom Kippur War, the strait played a pivotal role when Egypt blocked the passage of Iranian oil tankers en route to Israel. This move was part of a broader Arab strategy to economically isolate Israel by cutting off vital energy supplies. The blockade underscored the vulnerability of maritime chokepoints like Bab el-Mandeb and marked Israel’s first significant experience with the geopolitical leverage exercised through control of this narrow waterway. Already during the Cold war the area was a strategic point both for the US and USSR; controlling the region meant controlling the gateway to the Horn of Africa. Nowadays, 30% of global container trade traditionally passes through the Red Sea corridor, making chokepoints such as the Suez Canal and the Bab el-Mandeb Strait vital arteries for the global economy between Europe and Asia.

Since late 2023, however, this essential trade route has become increasingly unstable due to persistent and targeted attacks by the Houthi's movement, which have weakened the shipping security in the region. The impact is massively clear: data from September 2024 reveal a 49% drop in vessel transits through the Suez Canal. Container ships, which have been specifically targeted by Houthi drone attacks, saw an even more dramatic decline of 71% in traffic compared to 2023 around 3000 fewer transits in November 2024. Bulk carriers, product tankers, and crude tankers also registered significant reductions of 35%, 46%, and 28%, respectively. The pick of containers in March 2024 is similar to March 2022 during Covid-19 pandemic. The estimated loss for the Suez 6$ billion, passing from 10$ billion in 2023 to 3.9$ billion. From the World Bank report 300 conflicts between October 2023 and September 2024 have painted the area with a high fatalities rate. Arms smuggling and ports control made Yemen a sort of a powder keg, constantly on the verge of ignition. Yemen has always been in the centre of domestic weapon smuggling specifically, for two reasons: culturally and logistically. The property of weapons has been an accepted social norm. It is a sort of status and prestige, and also a social need to defend their own community. Its position has permitted a historical bilateral flow of trade between the Arabian Peninsula and Africa. The connection with Africa, the instability of the region (including the situation in Somalia), and the past regional conflicts have increased the demand for weapons, creating a market in constant movement between terrorist groups, private individuals, States, and communities.

Nonetheless, the environmental impact of the current situation is stark: several containers carrying oil and chemical products have been hit by Houthi, causing slicks that covered an area of 8000 km² - approximately 34% Djibouti State, which is 23200 km². The reefs have been affected as it is the principal source of food for the regional residents. A huge number of people who live on the coast of Yemen, around 500.000, are constantly challenged by these conflicts. Most of them, particularly the coastal residents, who rely on fishing and Strait resources, have reduced their fishing activity, influencing the whole economy of the region. The economic impact is not just on the global maritime commercial line, but also deeply influences the local one. Internet connectivity and the underwater cables have been damaged, causing a slow connectivity for the regional infrastructure & financial movement of 25%. This decline has had ripple effects on financial systems, data flows, and logistical networks — further destabilizing economies that are already under pressure from inflation and trade rerouting.

Yet, to understand why a non-state actor, like the Houthis, is capable of creating such broad economic shockwaves, one must delve into the ethnic, historical, and socio-political origins of the movement.

Who are the Houthi? “Anṣār Allāh” or “Defenders of God”, the people who have been identified as Houthi, call themselves like this. The most common “Houthi” term is referring to Hussein Badr al-Din al-Houthi, a Zaydī activist and politician, assassinated in 2004. He initiated or reestablished the battle between the Zaydī community (Shi'sm) and the Yemeni government (Sunni). The Zaydī community has been the ruler of Yemen for 1000 years from 893 C.E. till the formation of the Arabic Republic of Yemen in 1962. They had the Imam as a religion & political centric figure. They follow the Shi's principles and Zayd ibn ʿAlī, a relative of Alī and the prophet Muhammed, a scholar who challenged the Umayyade dominance in the expansion era of Islam. Their belief has been perceived as one of the most similar to the Sunni approach, high practical and pragmatic, yet still part of Shia's broader movements. In particular the Zaidis share with the Sunnis many legal and doctrinal aspects, making them closer to Sunni orthodoxy compared to other Shia branches. The Zaydī community never accepted being isolated after the Yemeni civil war in the 60´s and excluded from the government and from the powerful regimes that characterised Yemen till 2015. In the last decades (till the end of the 90s), they have apparently cohabited with the government of Yemen and the Sunni community, indirectly influenced by the Saudis. In the 1990s there was an awakening of the movement connected to the roots, and old dreamed powers established a party called “Al-Ḥaqq” (Truth) Party. This Party tried to contrast the Saudi-influenced party “Islah” in the region for the whole '90s. The exit of Hussein Badr al-Din al-Houthi from the Al-Ḥaqq and the creation of the “Believing Youth” movement, a network of Zaydī, who tried to substitute the Yemeni State in many areas (social, religious, political, etc.), has created the perfect environment for internal tensions between the Believing Youth and the government. The government was settled by Saleh, a former military, Yemeni's president from the late 70's. Al-Houthi was against the invasion of Iraq in 2003, in contrast with Saleh's vision, explicitly expressing himself against the USA and Israel. This was one of the sparks that ignited everything. His assassination in 2004 only fuelled a community that felt unrepresented, eager to self-organize and to engage in confrontation on multiple levels: religious, political, and social.

The Arab Spring and the rise of the Houthi movement created fertile ground for civil war, which began with protests in 2014 and escalated into full-scale civil conflict by 2015. In 2017, the capital, Sanaa, fell into Houthi hands. The roots that make the Houthis resilient lie in their social, historical, and communal identity as a half century marginalized minority. Yet, how is it possible that they are able to hold hostage nearly one-third of global maritime trade? Their tactics are rooted in asymmetric warfare and refined guerrilla strategy. The use of drones, light weapons, missiles, speed and knowledge of territory (and itself the landscape) made the maritime trade and the ships a clear objective for them. The religious and geopolitical alignment with Iran, suggesting they may be operating as proxies within a broader regional chessboard. However, it is precisely this narrative — that of a passive, non-strategic actor — that has led both the West and parts of the Sunni world to lower their guard. The Houthis’ guerrilla tactics are supported by their knowledge of Yemen’s landscape, composed of rugged and mountainous terrain, which offers natural defensive advantages and has historically favoured insurgent warfare. This approach is specific to other non-state actors who go far beyond the definition of only armed groups. Like Hezbollah in Lebanon, the Houthis have shown the ability to be fluid, shifting between military organization, political movement, and communal representation, often acting as an extension of the will of their community or clan. In fact, the clan or tribal community is something widely represented in the Arabian Peninsula, where prophetic codes are deeply connected with the way of life and the territory. Yemen has an ancient history of tribes, the roots are strong, but not untouchable, specifically from the last century. The geo-economical factors and new uses have influenced their internal relationship with the governors of the country. Yemen is composed of a lot of tribal communities which adapt themselves constantly and are influenced by huge historical, social, relational, and political factors between themselves and the several actors they interact with, such as: Saudi, Iran, Africa’s States, Egypt, world trade organisations, and regional conflicts. These communities could be resilient to any external intervention or absorb and adapt to the influences. The Yemeni people have traditionally been considered to descend from the Qaḥṭānites (Qaḥṭāni), the ancient Arabs of the South, regarded as the "pure" or "original" Arabs (al-ʿArab al-ʿĀriba). In Arab tradition, they are distinguished from the ʿAdnānites, the Arabs of the North. Factors such as the social composition, the passage from a rural to commercial economy, the rise of extremism, the educational level, left a sign on the Zaydī community during the decades, and so on to the Houthi's movement. The Houthi takes the ideological root of the Zaydī in the north of the country, with precise codes and practices that influence their behavioural aspects of today, also in their battle approach.

The Houthi demonstrated technological and modern tactics. Their use of drones and short-to-medium-range missiles underscores a capacity for targeted attacks that blend ideology with modern warfare capabilities at a fraction of the cost required to defend maritime ships. The recent US attacks cost around $1 billion: from March 2025, the US used ASSM long-range cruise missiles, aircraft, and GPS missiles. Houthi has an arsenal of anti-ship ballistic missiles, hypersonic ballistic missiles, and advanced unmanned aerial vehicle (UAV) technology.

The Houthis have proven that even with limited resources, a well-organized non-state actor within a strong communal identity, supported by asymmetric military innovation, can exert disproportionate influence on global economic flows. Their low-cost technologies can challenge the most modern weapons, and the current conflict gives them an advantage in terms of tactics, cost-effectiveness, and disruption. The force is composed of thousands of people (it seems more than 200,000, in 2021): militants, professional soldiers, loyal tribal shaykhs, local commanders (with logistical and territorial credibility), Houthi's family officials and local supports. Looking ahead, the challenges are likely to grow more complex. The region remains geopolitical unstable, where religious, tribal, and strategic interests converge. The Red Sea, once seen merely as a transit corridor, has now become a frontline of hybrid warfare, where localized demands interact with global powers' needs. The Bab el-Mandeb Strait will remain a narrow waterway with vast implications — a strategic fault line where the future of global trade, security, and diplomacy will continue to be tested: a powder keg where geopolitics intersects with economics, intertwining with ethnicity, statehood, and territory.