Red Sea is reeling from devastating Houthi attacks, raising the risk of war

Following devastating attacks on two commercial vessels by Yemen’s Houthi rebels, maritime security in the Red Sea and Gulf of Aden has drastically deteriorated, alarming the world’s shipping industry and causing a dramatic increase in war risk premiums. Using simultaneous explosive charges to fracture the ship’s hull, the Houthis published a video that purports to show the intentional sinking of Magic Seas, a Greek-owned dry bulk tanker. Shortly after the explosions, the ship was observed foundering, like in previous attacks.

On July 6, the Liberian-flagged Magic Seas was attacked by Houthi forces, their first commercial ship targets this year, using drones, missiles, and rocket-propelled grenades. The assault forced the crew to abandon the vessel.

Just a day later, on July 7, the Eternity C, another Liberian-flagged, Greek-operated bulker, came under attack approximately 50 nautical miles southwest of Yemen’s Hodeidah port. The assault involved sea drones and small boats armed with rocket-propelled grenades. The vessel sustained significant damage and sank.

A Seagull Maritime team from a nearby commercial vessel was briefed under SOLAS and organized an operation to approach the vessel, rescue the crew, and administer medical aid when Houthi skiffs left the area. Life rafts were empty upon arrival, and no crew members were discovered in the sea. In accordance with SOLAS, other ships might have also approached the ship to provide aid. As of this writing, 16 crew members are still missing and are thought to be in the sea, five have been rescued, and four are thought to have died and are still on board the submerged ship.

The attacks in recent days are likely to push back any significant return of the global merchant fleet to the Suez Canal. According to data from Jefferies, transits through the Suez Canal in 2025 are down 55% compared to 2023. The impact is even more stark in key shipping segments with containership transits down by 90%, LNG carriers down 80%, and LPG carriers down 72%.

The latest attacks have rattled global insurers, prompting a sharp increase in war risk premiums. Premiums surged from around 0.4% to 1% of a vessel’s value, effectively more than tripling the cost of cover. This means the cost of insuring a $100m vessel has jumped from around $300,000 to as much as $1m per voyage, according to data from insurer Marsh McLennan.