Paolo Gentiloni, the EU’s economic commissioner, issued a warning on Monday, stating that rising energy costs and inflation within the bloc could result from turmoil in the Red Sea caused by Huthi attacks on shipping.
“We know that we’re starting this year with subdued growth, some good news on the labour market, but increasing concerns on the downside risks caused by the geopolitical tensions,” Gentiloni said at the start of a meeting of EU finance ministers.
Gentiloni said that “what is happening in the Red Sea… is not for the moment apparently creating consequences on energy prices and inflation”.
“But we think that it should be monitored very closely because these consequences could materialise in the coming weeks,” he said.
Following bombings by the United States and Britain on Huthi rebels in Yemen due to their attacks on foreign ships, tensions in the Red Sea have escalated.
An increasing number of missile and drone assaults have been launched by the Iran-backed Huthis, who claim to be acting in sympathy with Gaza, on what they believe to be Israeli-linked vessels on the vital Red Sea commerce route.
Normally, it processes about 12% of all transactions worldwide. However, since the attacks began in mid-November, a lot of shipping companies have chosen to take the longer route around Africa’s tip, which has caused supply chains to be disrupted and inflation to rise.
