Biden Adviser Sees Limited Inflation Impact from Red Sea Attacks

President Joe Biden’s energy security adviser said the impact of Houthi rebel attacks on commercial ships in the Red Sea is limited and pledged continued US action to curb the Iranian-backed group’s ability to disrupt markets.

Cost pressures have been more on logistics than on energy commodities, Amos Hochstein said on CBS’s Face the Nation on Sunday 28 Jan. “The costs do go up,” Hochstein said. “But if you look at what they impact, the inflationary impacts are relatively muted.” 

Two months of missile, drone and hijacking attacks against civilian ships in the Red Sea have caused the biggest diversion of international trade in decades, pushing up global shipping costs and forcing hundreds of cargo ships to take alternative routes. Yet oil prices are lower than on Oct. 7 when an attack by Hamas militants on Israel triggered a war between the two sides.

“We’re going to continue to work to mitigate and degrade the efforts that the Houthis have to attack,” Hochstein said.

A tanker operated on behalf of trading giant Trafigura Group carrying a cargo of Russian fuel was hit in a Houthi missile attack in the Gulf of Aden on Friday, marking the most significant attack yet by the rebel group on an oil-carrying vessel.

Tanker traffic in the region has declined since joint US and UK airstrikes on the Houthis this month, but some oil exporters, including Saudi Arabia, continue to use the waterway.