Middle East maritime instability drives up oil prices and shipping costs

Geopolitical instability in the Middle East is driving up global energy prices and disrupting international shipping routes. Brent crude oil rose 13 percent in one week, jumping from 78 dollars to 90 dollars per barrel, fueled by uncertainties regarding ceasefire negotiations and attacks on energy infrastructure.

Maritime security risks have expanded beyond the Strait of Hormuz. The Bab el-Mandeb Strait, which connects the Red Sea to the Indian Ocean, has seen commercial vessels targeted by ballistic missiles. These disruptions are forcing a shift in logistics; as the Strait of Hormuz faces potential blockages, the Red Sea becomes a critical alternative for Saudi oil shipments, though this route faces increased insurance premiums and freight costs.

The crisis is significantly impacting Turkish exporters, particularly in the carpet sector. Due to the instability in the Red Sea and the Strait of Hormuz, sea shipments to the United Arab Emirates, Kuwait, Bahrain, and Oman have reached a standstill. Container prices have increased three to four times, leading many exporters to pivot to land transport. However, this shift has created a secondary crisis, with truck freight costs rising to between 8,000 and 9,000 dollars and a shortage of available vehicles.