U.S. lists Houthis as terrorists, rebels hit another US-operated ship

By Jonathan Saul, Simon Lewis and Megan Davies

LONDON/WASHINGTON/DAVOS, Switzerland (Reuters) -The U.S. on Wednesday returned the Yemen-based Houthi rebels to a list of terrorist groups, as the militants attacked their second U.S.-operated vessel in the Red Sea region this week and the U.S. military carried out fresh strikes.

Attacks by the Iran-allied Houthi militia on ships in the region since November have slowed trade between Asia and Europe and alarmed major powers in an escalation of the war between Israel and Palestinian Hamas militants in Gaza.

The Houthis say they are acting in solidarity with Palestinians and have threatened to expand attacks to include U.S. ships in response to American and British strikes on the group’s positions.

In a sign it remains undeterred, the Houthi movement on Wednesday said its missiles had made a “direct hit” on the U.S. Genco Picardy bulk carrier.

Shipping operator Genco confirmed the attack, and said its vessel was hit by a projectile while it was transiting through the Gulf of Aden with a cargo of phosphate rock.

Genco said there were no injuries to the crew and the ship suffered limited damage to its gangway and was on a course out of the area.

Hours later, the U.S. military said its forces had conducted strikes on 14 Houthi missiles that “presented an imminent threat to merchant vessels and U.S. Navy ships in the region”.

The Houthi-controlled news agency Saba said U.S. and British strikes had targeted several areas in Yemen, and a spokesman for the group said it would continue its attacks.

“The naval forces will not hesitate to target all sources of threat in the Red and Arabian sea within the legitimate right to defend Yemen and to continue supporting the oppressed Palestinian people,” the group’s military spokesperson Yahya Sarea said in a statement.

On Monday, Houthi forces struck the U.S.-owned and operated dry bulk ship Gibraltar Eagle with an anti-ship ballistic missile. There were no reports of injuries or significant damage.

U.S. officials said naming the Houthis as a “Specially Designated Global Terrorist” was aimed at cutting off funding and weapons the movement has used to attack or hijack ships.

A Houthi spokesman told Reuters that attacks on ships heading to Israel would continue and the designation would not affect its position.

Iranian Foreign Minister Hossein Amirabdollahian, whose country backs Hamas in its war with Israel, said an end to the war in Gaza was needed to remove the threat to shipping.

“The security of the Red Sea is tied to the developments in Gaza, and everyone will suffer if Israel’s crimes in Gaza do not stop … All the (resistance) fronts will remain active,” Amirabdollahian said at the World Economic Forum in Davos.

SUPPLY CHAINS SNARLED

Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending them on a longer route around Africa or pausing until the safety of vessels can be assured.

“It’s one of the most important arteries of global trade and global supply chains and it’s clogged up right now,” Maersk CEO Vincent Clerc told Reuters Global Markets Forum in Davos, adding disruption would probably last at least a few months.

The attacks, as well as weather-related closures and stoppages in Europe, were causing congestion at several container terminals, Maersk told its customers on Thursday.

Banking executives are worried the crisis might create inflationary pressures.

Freight rates have more than doubled since early December, according to maritime consultancy Drewry’s world container index, while insurance sources say war risk premiums for shipments through the Red Sea are also rising.

The attacks target a route that accounts for about 15% of the world’s shipping traffic and acts as a vital conduit between Europe and Asia. Japanese trading house Sumitomo Corp said it had some cargoes in the Red Sea that were affected.

The attacks are causing major disruption to Italian ports, fuelling fears a prolonged crisis may force companies to reroute traffic away from the Mediterranean more permanently.

Italy wants fellow European Union members to agree next week to create an EU maritime security mission that can become operational as soon as possible, Italian Foreign Minister Antonio Tajani said.

The alternative shipping route around South Africa’s Cape of Good Hope can add 10-14 days to a journey compared to passage via the Red Sea and the Suez Canal.

Prolonged attacks by the Houthis on ships would lead to a shortage of tankers, the CEO of Saudi oil giant Aramco (TADAWUL:) said.

“If it’s in the short term, tankers might be available … But if it’s longer term, it might be a problem,” CEO Amin Nasser said in an interview in Davos.

Earlier on Wednesday, a Malta-flagged container ship was approached by three skiffs and a drone 10 miles southwest of Yemen’s Dhubab. No damage or casualties were reported, an advisory note from British maritime security firm Ambrey said.