Davos summit addresses Gaza conflict, oil price concerns, and shipping disruptions
Davos summit addresses Gaza conflict, oil price concerns, and shipping disruptions
Jake Sullivan, White House National Security Advisor, urged calm among summit attendees, asserting that the U.S.-backed war is not expected to escalate into a global crisis
The Gaza conflict has taken center stage on the agenda of the global elite convening this week in Davos, amid concerns about its potential impact on oil prices, inflation, and global trade. The primary concern is the effects of maritime terrorism by the Houthis, an armed militia and proxy of Iran, on the trade routes in the Red Sea region. This Yemeni terrorist organization attacks any commercial ship it suspects of being connected to Israel, as a result of the fighting in Gaza.
In response to these concerns, Jake Sullivan, White House National Security Advisor, urged calm among summit attendees, asserting that the U.S.-backed war is not expected to escalate into a global crisis. Speaking at the economic forum, Sullivan emphasized the need for the United States and regional powers to present a unified and clear response to prevent the spread of the conflict. He stated that the U.S. will stay the course and expects its partners, including all those present at the discussion, to continue supporting the U.S. Sullivan stressed the importance of maintaining commitment to diplomacy, especially in parallel with escalating geopolitical tensions.
Secretary of State Antony Blinken, interviewed by journalist Thomas Friedman during the conference, discussed the potential aftermath of the war. Friedman said a resolution to the Israeli-Palestinian conflict could weaken Iran and contribute to its isolation in the region. Blinken also noted a historic shift, with many Arab countries now willing to collaborate for genuine security and normalize relations with Israel. He emphasized the necessity of establishing an independent Palestinian state for the success of this mission.
In the meantime, the effects of the attacks by the Houthis operating in Yemen were discussed in detail at the Davos summit, against the background of the fear of rising oil prices as a result of supply disruptions.
Michael Wirth, CEO of energy giant Chevron, expressed serious concerns in an interview with CNBC, stating that the crisis significantly jeopardizes oil shipments and could lead to sharp price increases. Wirth noted his surprise that oil in the United States is traded at a low price of less than $73 per barrel, given the risks. Despite the risks, Chevron continues to transport oil through the Red Sea under the protection of the U.S. Navy but warned that the situation may deteriorate. "We are closely monitoring the situation," he concluded.
In contrast, the British oil company Shell has halted shipments through the Red Sea, as have the oil giant BP and several shipping companies, including Maersk.
Last week, the United States and Britain carried out targeted attacks against the Houthis, but this has not stopped the Yemen terrorist group, and on Wednesday they fired missiles at a ship sailing under the flag of Malta. According to reports, the פship was able to continue on its way. Following the attacks, the United States put the Houthis back on the list of terrorist organizations, a decision that blocks their access to the global financial system.
Meanwhile, there is concern that the Houthi attacks will lead to an increase in air shipping rates, in addition to the increase in the cost of sea shipments. The shipping companies' decision to extend the route led to higher tariffs, after goods worth about $200 billion were diverted from the fast route connecting Asia and Europe.
Matthew Burgess, Deputy Vice President at the logistics company C.H. Robinson, commented on the situation, stating that shippers are in survival mode with the sole goal of getting the cargo through any way possible. The German logistics company DHL reported an increase in customer interest in air shipping and is anticipating price changes if the Red Sea situation persists.
In this challenging landscape, global shipping leaders such as Korean Air Cargo, Schenker, Bollore Logistics, and CH Robinson are adapting to the evolving situation. Automotive manufacturer Stellantis reported relying on air shipping to navigate disruptions. Analysts predict that as more companies shift to air shipping, prices will rise. Another contributing factor is the upcoming Chinese New Moon holiday, traditionally associated with increased exports from Asia.
